Insurance Flashcards
What are the tax implications for premiums paid by an employer on behalf of an employee for health and dental benefits?
Tax deductible to the employer
Benefits and employer paid premiums are tax free to employee
What are the tax implications of an employee pays the premium for health and dental benefits through an employee’s group plan or as an individual health plan?
The premium qualifies as a medical expense for non refundable tax credits.
What is the income gain in a partial surrender?
Proceeds from the partial surrender - (proceeds from the partial surrender / total CSV X ACB)
Are dividends on deposit included in the income gain calculation on the surrender of a policy?
No. The income gain on a full surrender is CSV - ACB even though upon surrendering the policy, the owner receives CAV + dividends on deposit
Interest on a policy loan is usually tax deductible if the loan is used to earn income from a business or property. If the interest is deducted and it’s paid back into the policy, can it still increase the ACB of the policy?
No.
If the interest was not deducted for tax purposes then it can be added to the ACB of the policy, otherwise no.
