Disability & Long-Term CareQuestion 645 of 716
If an employer pays the disability income premiums and does not include them in the employee's income, the disability benefits the employee later receives are:
a.Fully deductible by the employee
b.Taxable as income to the employee
c.Received completely income-tax-free
d.Exempt from all federal payroll tax
Explanation
When the employer deducts the premiums and does not tax them to the employee, the resulting benefits are taxable to the employee. The flip side of tax-free premiums is taxable benefits.
This topic, taught in full in the California Life & Health Insurance Producer Exam guide. California Life & Health Insurance Producer Exam — Complete Study Guide (2026) — PDF + EPUB, $19.99 · 14-day refund →
Practice all 716 questions free — no signup required.
Own the complete California Life & Health Insurance Producer Exam guide — PDF + EPUB, $19.99 →
Related questions on this topic
- Under a presumptive disability provision, the insured is automatically considered totally disabled, often with no elimination period, upon:
- Individual disability income benefits are usually limited to roughly 60 to 70% of earned income so that:
- When an individual pays disability income premiums with after-tax dollars, the benefits received are:
- Business overhead expense (BOE) insurance is designed to:
- Business overhead expense benefits are generally ________, and the premiums are generally ________:
- Key person disability insurance is owned by and pays benefits to:
Last reviewed: · editorial process
PrepPass team · Verified against California Life & Health Insurance License Exam · How we review
Reviewed by John Zihao Zhang — California-Licensed Life Insurance Agent (CA Dept. of Insurance License #4396095 — verify)