This course examines the tax treatment of life insurance transactions, including death benefits, cash value withdrawals, loans, and surrenders. It also covers tax implications of policies failing to meet statutory definitions, modified endowment contracts, ownership transfers, employer-owned policies, and use in qualified retirement plans.

Learning Objectives

• Calculate the gain recognized from life insurance policy transactions, including withdrawals, loans, surrenders, and death benefit payments
• Identify the changes to the customary tax treatment of life insurance policy living proceeds resulting from the policy being deemed a modified endowment contract (MEC)
• Calculate the reportable gain upon receipt of life insurance policy death benefits when the policy has been transferred for valuable consideration or was included in a qualified plan
• Recognize the types of life insurance exchanges that are tax-free under IRC Section 1035
• Define the terms terminally ill and chronically ill as used in the Health Insurance Portability and Accountability Act
• Identify the income tax treatment of accelerated death benefits, viatical settlements, and life settlements