Question

Clayton is asking his life insurance producer about any potential taxation issues related to his $100,000 personal Whole Life policy. All of the following are TRUE, except:A. Since his policy is a personal policy, he cannot deduct the premiums he pays for the policyB. Annual increases in the policy's cash value are not taxable at the time they are credited to the policyC. Upon surrender of the policy, he will be taxed on any amount by which the cash value exceeds the cost basis (premiums paid) of the contractD. The interest that he pays on policy loans is tax-deductible

Answer 1

The following are TRUE, except : The interest that he pays on policy loans is tax-deductible

Explanation:

Lifelong insurance is indeed a life insurance policy that is intended to remain in effect for the lifetime of the Insured, provided that the necessary premiums are reimbursed or on the maturity date (throughout the Commonwealth of Nation-states) and sometimes referred to as ' straight house ' or ' ordinary life'

A complete life policy offers your entire lifetime a certain amount of coverage. Once you pay the premiums, the profit will be earned on your death by your survivor. The entire policy on life always generates' cash value' as part of the money spent. The cash value can be reached as the funds rise.