LLQP (Life Licence Qualification Program) Practice Exam · Question
If a corporation takes out a loan and uses a life insurance policy as collateral, what portion of the premium may be tax-deductible?
A collateral assignment of a life insurance policy for a loan from a financial institution allows a business to deduct the portion of the premium relating to th
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Question: If a corporation takes out a loan and uses a life insurance policy as collateral, what portion of the premium may be tax-deductible?
Answer options:
- The full amount of the annual premium.
- The interest paid on the loan only. ✅ The lesser of the premium paid or the Net Cost of Pure Insurance (NCPI).
- None of the premium is ever deductible.
Correct answer: The lesser of the premium paid or the Net Cost of Pure Insurance (NCPI).
Explanation: A collateral assignment of a life insurance policy for a loan from a financial institution allows a business to deduct the portion of the premium relating to the Net Cost of Pure Insurance (NCPI).
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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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