Question

Death benefits payable to a beneficiary under a life insurance policy are generally

A. Exempt from income taxation if over $7,000.
B. Not subject to income taxation by the Federal Government.
C. Subject to income taxation by the Federal Government.
D. Exempt from income taxation if under $7,000.

Answer 1

Death benefits payable to a beneficiary under a life insurance policy are generally exempt from income taxation by the Federal Government.

Step-by-step explanation:

Death benefits payable to a beneficiary under a life insurance policy are generally exempt from income taxation by the Federal Government. Life insurance proceeds are considered non-taxable because they are considered a death benefit and not income. This means that the beneficiary of a life insurance policy does not have to pay taxes on the amount received.