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Tax Treatment of Life Insurance ProceedsCode: 21-TAXINS
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Course description and objectives:
In this course we will look at the tax treatment given proceeds from life insurance policies and will consider the taxation of death benefits, cash value withdrawals, loans and surrenders. In addition, we will examine the differences in tax treatment caused by a life insurance policys:
- Failure to meet the statutory definition of life insurance;
- Being deemed a modified endowment contract;
- Transfer of ownership to another person for a valuable consideration;
- Sale in a viatical or life settlement transaction;
- Ownership by an employer; and
- Use in a qualified retirement plan.
Upon completion of this course, you should be able to:
- Calculate the gain to be recognized as a result of various life insurance policy
- surrrenders, and
- payment of death benefits
- Identify the changes to the customary tax treatment of life insurance policy living
proceeds resulting from the policy being deemed a modified endowment contract
- Calculate the reportable gain upon receipt of life insurance policy death benefits when
the life insurance policy
- has been transferred for a valuable consideration, or
- was included in a qualified plan;
- Recognize the types of life insurance exchanges that are tax-free under IRC §1035;
- Define the terms terminally-ill and chronically-ill as used in the Health Insurance
Portability and Accountability Act; and
- Identify the income tax treatment of accelerated death benefits, viatical settlements
and life settlements.
CPE credit: 2 Hours
Program Level: Update
Advance Preparation: None
Exam expiration date: Participants must submit exams for grading within one year from the date of purchase
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