Question

Which of the following is true regarding the taxation of the premium in group accidental death and dismemberment policies?

A) Premiums are tax-deductible for the insured
B) Premiums are not tax-deductible for the insured
C) Premiums are tax-deductible for the employer
D) Premiums are not taxable for the beneficiary

Answer 1

Premiums for group accidental death and dismemberment policies are not tax-deductible for the insured but may be deductible for the employer, and the benefits are usually not taxable for the beneficiary.

Step-by-step explanation:

Regarding the taxation of the premium in group accidental death and dismemberment policies, it is true that premiums are not tax-deductible for the insured (Option B). However, premiums paid by employers on behalf of their employees for such policies can often be deducted as a business expense, so in some contexts, premiums can be tax-deductible for the employer (Option C). It's also important to note that the benefits received from such policies are typically not taxable income for the beneficiary (Option D).