Question

Mr. Raines is the recipient of an Accidental Death and Dismemberment (AD&D) policy purchased by his employer. The policy pays triple indemnity in case of accidental death. If Mr. Raines died 2 months after an accident, as a result of an accident stipulated in the policy, how will the benefits paid be taxed?

Answer 1

The benefits from the Accidental Death and Dismemberment (AD&D) policy will not be taxed if Mr. Raines dies as a result of an accident stipulated in the policy.

Step-by-step explanation:

If Mr. Raines died 2 months after an accident, as a result of an accident stipulated in the policy, the benefits paid from the Accidental Death and Dismemberment (AD&D) policy will not be taxed. AD&D benefits are generally not subject to federal income tax. However, it's important to note that tax laws can vary by country and state, so it may be beneficial for Mr. Raines or his beneficiaries to consult with a tax professional for specific advice.