LLQP (Life Licence Qualification Program) Practice Exam · Question
Which corporate account allows a private corporation to pay out life insurance death benefits to its shareholders tax-free?
Corporate-owned life insurance proceeds are paid tax-free to the corporation. The amount of the proceeds minus the policy's ACB can then be paid out to sharehol
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Question: Which corporate account allows a private corporation to pay out life insurance death benefits to its shareholders tax-free?
Answer options: ✅ Capital Dividend Account (CDA)
- Capital Gains Account (CGA)
- Refundable Dividend Tax on Hand (RDTOH)
- General Rate Income Pool (GRIP)
Correct answer: Capital Dividend Account (CDA)
Explanation: Corporate-owned life insurance proceeds are paid tax-free to the corporation. The amount of the proceeds minus the policy's ACB can then be paid out to shareholders as tax-free dividends through the CDA.
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- A life insurance policy that offers lifelong coverage, a guaranteed death benefit, and a savings component tha
- Group benefits in Canada commonly include:
- Sarah, a 35-year-old marketing professional in Ontario, purchases a participating whole life insurance policy
- Mark, a 45-year-old business owner in British Columbia, has a Universal Life policy with a Level Cost of Insur
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