The Annual Increase in the Cash Surrender Value of a Life

question 41

Multiple Choice

The annual increase in the cash surrender value of a life insurance policy:

• A)Is taxed when the individual dies and the heirs collect the insurance proceeds.
• B)Must be included in gross income each year under the original issue discount rules.
• C)Reduces the deduction for life insurance expense.
• D)Is not included in gross income each year because of the substantial restrictions on gaining access to the policy's value.
• E)None of these.

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Definitions:

Proportional Controller

A type of feedback controller that generates an output signal by multiplying the error between a desired setpoint and a measured process variable by a constant.

On/Off Control

A basic form of control used in various applications where the output is simply turned on or off, without intermediate states.

Distributive Control System

A type of automated control system that distributes control functions into smaller subsystems throughout the process but is managed by one central system.

Processing Task

An operation performed by a computer or controller, involving the manipulation or analysis of data.