1. For federal income tax, a life insurance death benefit paid in a lump sum to a named beneficiary is generally:

Received income-tax-free

Life insurance death proceeds paid in a lump sum are generally received free of federal income tax.

2. Cash value growth inside a Washington life policy is generally treated for federal tax as:

Tax-deferred while it remains in the policy

Inside cash value typically grows tax-deferred and is not taxed annually as long as it stays in the policy.

3. A life policy that is overfunded beyond federal limits may be classified as a:

Modified endowment contract

A policy funded faster than the federal seven-pay limit becomes a modified endowment contract, changing the tax of distributions.

4. When a Washington annuity owner takes a withdrawal of gains before payout, those gains are generally:

Taxed as ordinary income

Annuity gains are tax-deferred during accumulation and taxed as ordinary income when withdrawn.