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:

Preoperational

A stage in Jean Piaget's theory of cognitive development where children from ages 2 to 7 engage in symbolic play and struggle with logic and taking the perspective of others.

Nonstage Theories

Cognitive development theories that argue against the idea of distinct, universal stages of cognitive growth, suggesting instead that development is a more continuous and fluid process.

Gradual Acquisition

The slow and steady process of learning or obtaining knowledge or skills over time.

Memory Capacity

The amount of information that can be held in memory, encompassing short-term, long-term, and working memory capacities.