1. Life insurance death benefits paid in a lump sum to a named beneficiary are generally:

Received income-tax-free

Lump-sum life insurance death proceeds paid to a beneficiary are generally received free of federal income tax.

2. The growth of cash value inside a permanent life insurance policy is generally:

Tax-deferred while it remains in the policy

Cash value generally accumulates on a tax-deferred basis as long as the funds remain inside the policy.

3. When annuity payments are received, the portion representing investment gain is generally:

Taxed as ordinary income

The gain portion of annuity payments is taxed as ordinary income, while the return of cost basis (the exclusion ratio) is not taxed.

4. Premiums an individual pays for personal life insurance are generally:

Not tax-deductible

Premiums for personally owned life insurance are generally not deductible because the death benefit is received income-tax-free.