Arkansas Life and Health Insurance Exam 2025 – 400 Free Practice Questions to Pass the Exam

Disable ads (and more) with a premium pass for a one time $4.99 payment

Question: 1 / 205

Why are dividends not taxable as income when paid out to a participating policyholder?

They are considered a capital gain

Dividends paid out to a participating policyholder are not taxable as income because they are considered a return of a portion of the premium paid. This means that the policyholder is essentially receiving back a portion of the money they have already paid into the policy, rather than earning additional income. This is why dividends are not classified as taxable income.

Get further explanation with Examzify DeepDiveBeta

They represent a return of a portion of the premium paid

They are classified as gifts

They are considered interest

Next

Report this question

Subscribe

Get the latest from Examzify

You can unsubscribe at any time. Read our privacy policy