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

Received free of federal income tax

A lump-sum death benefit paid to a named beneficiary is generally received free of federal income tax.

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

Tax-deferred while it remains in the policy

Inside buildup of cash value is generally tax-deferred while it remains in the policy; gains can be taxable upon surrender.

3. A life policy overfunded beyond federal limits may be classified as a Modified Endowment Contract (MEC), which mainly changes the tax treatment of:

Living distributions such as loans and withdrawals

A MEC primarily changes the taxation of living distributions (loans and withdrawals), which become taxable on a LIFO basis with possible penalties.

4. Premiums paid for an individual's personal life insurance are generally:

Not deductible for federal income tax

Premiums for personal life insurance are generally not deductible for federal income tax purposes.