Why are dividends from a mutual insurer not subject to taxation?

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Why are dividends from a mutual insurer not subject to taxation?

a) Because insurance premiums are tax-deductible
b) Because dividends are already subject to capital gains
c) Because dividends are payable directly to the policyholder
d) Because dividends are considered to be a return of premium

Answer: d) Because dividends are considered to be a return of premium

WA Life Insurance

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An insured's building has an actual cash value of $200,000, and he has insured the property for $120,000 with an 80% coinsurance clause. A $40,000 loss occurs. How much will the policy pay?

An insured's building has an actual cash value of $200,000, and he has insured the property for $120,000 with an 80% coinsurance clause. A $40,000 loss occurs. How much will the policy pay? a) $0 b) $30,000 c) $32,000 d) $40,000 Answer: B

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