Free Preparation Discussions
MENU
Virginia Insurance Virginia Life, Annuities, and Health Insurance Examination Series 1101 Exam - Topic 7 Question 2 Discussion
Topic #: 7
Which is true about disability buy-sell insurance policies?
Disability buy-sell insurance funds a business partner's buyout if one becomes disabled, per Virginia Code 38.2-3100 et seq. Option C is true; proceeds are typically tax-free under IRC 104(a)(3) as insurance benefits, not income, if premiums aren't deducted. Option A is false; the policyowner (e.g., a partner or business) is often the beneficiary to fund the buyout. Option B is false; benefits go to the business or partner, not the disabled individual, who may receive separate disability income coverage. Option D is false; premiums aren't tax-deductible (IRC 265), preserving tax-free proceeds. The study guide likely explains this with scenarios---e.g., $500,000 paid tax-free to buy out a disabled partner---highlighting tax treatment, making C the true statement.
Tomoko
5 hours agoChantell
5 days agoBettye
11 days agoIluminada
16 days agoDaniel
2 months agoAndrew
2 months agoTamesha
2 months agoElina
3 months agoBurma
3 months agoLayla
3 months agoLeeann
3 months agoSamira
3 months agoLelia
3 months agoCassi
4 months agoBoris
4 months agoDelbert
4 months agoLeandro
5 months agoInes
5 months agoMarya
5 months agoElliott
5 months agoCatherin
5 months agoArlette
6 months agoDelmy
6 months ago