LLQP (Life Licence Qualification Program) Practice Exam · Question
Jean's employer pays 100% of the premiums for a group long-term disability plan. If Jean becomes disabled and receives benefits, how are these benefits treated for tax purposes?
Group disability benefits are taxable to the employee if the employer pays any portion of the premium. If the employee pays 100% of the premium with after-tax d
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Question: Jean's employer pays 100% of the premiums for a group long-term disability plan. If Jean becomes disabled and receives benefits, how are these benefits treated for tax purposes?
Answer options:
- The benefits are tax-free because they are for a disability.
- The benefits are 50% taxable. ✅ The benefits are fully taxable as income to Jean.
- The benefits are taxable only if they exceed Jean's previous salary.
Correct answer: The benefits are fully taxable as income to Jean.
Explanation: Group disability benefits are taxable to the employee if the employer pays any portion of the premium. If the employee pays 100% of the premium with after-tax dollars, the benefits are tax-free.
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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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