Florida Life and Health Insurance License Practice Test

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Prepare for the Florida Life and Health Insurance License exam with our comprehensive test prep resources. Engage with multiple-choice questions that cover key topics crucial for your success in the insurance field. Get ready to ace your certification exam!

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Practice this question and more.

Which of the following Dividend options results in taxable income to the policyowner?

Paid-up additions
One-year term option
Accumulation at interest
Cash option

The correct answer is: Accumulation at interest

Accumulation at interest refers to a dividend option where the insurance company invests the dividends into a separate account, earning interest. This results in taxable income for the policyowner since the dividends are considered to be earnings and not a return of premiums. The other options are not taxable because Paid-up additions increase the death benefit and are considered a return of premiums, not income. One-year term option provides a one-year term insurance coverage and does not generate any income. Cash option simply pays out the dividends in cash and does not generate any additional income.