If a Beneficiary Opts to Receive a Life Insurance Death

Multiple Choice

If a beneficiary opts to receive a life insurance death benefit in installments rather than in a lump sum, what are the beneficiary's tax consequences?

A) The total amount of installment payments received by the beneficiary, regardless of how much, will not be subject to income taxation
B) The amount of installment payments received by the beneficiary that is in excess of the total amount of death benefit at the insured's death will be subject to income taxation
C) The entire amount of all installment payments received by the beneficiary will be subject to income taxation
D) If the beneficiary dies within three years of receiving the final installment payment, the entire amount of installment payments they received will be subject to income taxation