New York State Life Insurance Exam Questions Practice Question
Which of the following plans will provide a death benefit to the policy's beneficiary income tax free?
Correct Answer: B
Rationale: Whole Life insurance provides a death benefit that is typically received by the beneficiary income tax-free, making it a favorable option for financial planning.
Annuities (Option A) primarily provide income during retirement and are subject to taxation on earnings. Qualified Retirement plans (Option C), such as 401(k)s, also impose taxes on distributions, which can include the death benefit. Tax Sheltered Annuities (Option D) allow for tax-deferred growth but do not guarantee a tax-free death benefit, as beneficiaries may face tax implications on withdrawals. Therefore, Whole Life stands out for its tax-free death benefit feature.
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