New York State Life Insurance Exam Questions Practice Question
Loans may generally be obtained against the cash value of a personal life insurance policy and policy loan proceeds
Correct Answer: B
Rationale: Loans against the cash value of a personal life insurance policy are not treated as taxable income, making option B accurate. This means that when policyholders borrow against their policy, they do not incur immediate tax liabilities.
Option A is incorrect because policy loan proceeds do not accelerate benefits; they simply provide access to cash without impacting the death benefit directly.
Option C is misleading as loans are not subject to Federal estate tax; rather, the death benefit may be subject to tax if the estate exceeds certain thresholds.
Option D is also incorrect; while loan proceeds are not taxable, they do not generate interest income for the policyholder.
Unlock All Questions
Subscribe to Premium for full access to all practice questions, detailed rationales, and performance tracking.
Subscribe Now