CLU (Chartered Life Underwriter) Exam

Under the annuity exclusion ratio, what portion of each annuity payment received is excludable from gross income?

The entire payment until the investment in the contract is recovered A proportionate amount representing the after-tax investment in the contract Only the gain portion of each payment None — all annuity payments are fully taxable

Correct Answer:

A proportionate amount representing the after-tax investment in the contract

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