Questions: Which of the following statements is TRUE concerning whole life insurance? A. Premiums are tax deductible. B. Policy loans are tax deductible. C. Dividend interest is not taxable. D. Lump-sum death benefits are not taxable.

The answer is D: Lump-sum death benefits are not taxable.

Explanation for each option:

A. Premiums are tax deductible.

• This statement is incorrect. Premiums paid for whole life insurance policies are generally not tax deductible for individuals. They are considered a personal expense.

B. Policy loans are tax deductible.

• This statement is incorrect. Policy loans taken against the cash value of a whole life insurance policy are not tax deductible. However, the interest paid on these loans is also not tax deductible.

C. Dividend interest is not taxable.

• This statement is partially incorrect. While dividends themselves are generally not taxable because they are considered a return of premium, any interest earned on those dividends is taxable.

D. Lump-sum death benefits are not taxable.

• This statement is correct. Generally, the lump-sum death benefits paid out to beneficiaries from a whole life insurance policy are not subject to federal income tax.

Summary: The correct statement concerning whole life insurance is that lump-sum death benefits are not taxable.