Regarding the taxation of individual annuities

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Reference no: EM131998082

1. A legal reserve in life insurance is a result of:

a.) Premium taxes payable by life insurance companies being postponed during the early policy years. b.) Dividends being paid to policyowners. c.) Inadequate premiums in the early years being subsidized by investment earnings. d.) Excess premiums in the early policy years being invested at compound interest.

2. Which of the following statements regarding the taxation of individual annuities is/are true?

I. The exclusion ratio is the percentage of the annuity that is taxable. II. After the net cost of the annuity has been paid to the annuitant, the total annuity payment is taxable. a.) I only b.) II only c.) Both I and II d.) Neither I nor II

Reference no: EM131998082

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