Question

When the owner of a $250,000 life insurance policy died, the beneficiary decided to leave the proceeds of the policy with the insurance company and selected the Interest Settlement Option. If at the time of withdrawal the interest paid was $11,000, the beneficiary would be required to pay income tax on

Answer 1

Answer:

If at the time of withdrawal the interest paid was $11,000, the beneficiary would be required to pay income tax on the same amount of $11,000.

Explanation:

The Interest Settlement Option is usually for people who don't need much money or the remedies which the Insurance Cover provides.

Sometimes they defer payment of the proceeds and collect interest on the same whilst they decide on what do do with the money.

When a beneficiary collects this sort of interest it is usually taxable.

Cheers!