Question

Treatment of accelerated death benefits made to a terminally/chronically ill person

a) Taxable
b) Non-taxable
c) Excludable
d) Deductible

Answer 1

Accelerated death benefits made to a terminally/chronically ill person are generally considered excludable from taxation. There are certain conditions that must be met for the benefits to be considered excludable.

Step-by-step explanation:

Accelerated death benefits made to a terminally/chronically ill person are generally considered excludable from taxation. This means that these benefits are not subject to income tax. However, there are certain conditions that must be met for the benefits to be considered excludable:

1. The benefits must be paid under a life insurance or annuity contract.
2. The person must be medically certified as terminally or chronically ill.
3. The benefits must be paid on a periodic basis.

It's important to note that the tax treatment of accelerated death benefits can vary based on individual circumstances, so it's recommended to consult with a tax professional for specific guidance.