# Ralph owns a \$50,000 nonparticipating whole life policy. Its cash value has accumulated to \$15,000, and he has paid a total of \$9,500 in premiums. If he surrenders the policy for its cash value, how will it be taxed?

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## Ralph owns a \$50,000 nonparticipating whole life policy. Its cash value has accumulated to \$15,000, and he has paid a total of \$9,500 in premiums. If he surrenders the policy for its cash value, how will it be taxed?

A) Ralph will receive \$9,500 tax-free; the \$5,500 balance is taxable as income.

B) Ralph will receive the \$15,000 as taxable income.

C) Ralph will receive the \$15,000 tax-free.

D) Ralph will receive \$5,500 tax-free; the \$9,500 balance is taxable as income.

Answer: Ralph will receive \$9,500 tax-free; the \$5,500 balance is taxable as income.

The above question Ralph owns a \$50,000 nonparticipating whole life policy. Its cash value has accumulated to \$15,000, and he has paid a total of \$9,500 in premiums. If he surrenders the policy for its cash value, how will it be taxed?, Was part of Insurance MCQs & Answers. I hope you got the correct answer to your question. Have a great time ahead.