Disability & Long-Term CareQuestion 647 of 716
Business overhead expense benefits are generally ________, and the premiums are generally ________:
a.received completely tax-free, while the premiums are also fully deductible as an ordinary business expense
b.taxable, because they reimburse deductible expenses; deductible as a business expense
c.taxable; not deductible
d.tax-free; not deductible
Explanation
BOE premiums are deductible as a business expense, and because they fund deductible overhead, the benefits received are taxable. This mirrors the general rule that deducted premiums lead to taxable benefits.
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Reviewed by John Zihao Zhang — California-Licensed Life Insurance Agent (CA Dept. of Insurance License #4396095 — verify)