I'm confused about one of the dividend options "A" in CARPT. It seems to me that there is a difference between the online lesson and the study manual on when you get taxed on it, unless I'm reading this wrong.
Online Lesson verbiage:
"A" can be applied to Accumulate at interest. In years gone by, when interest rates were higher, and insurance companies did not have to report interest earnings on an IRS form 1099, the Accumulate at Interest option was much more popular than it is today.When accumulated dividends are withdrawn they have an exclusion ratio, meaning that the dividends themselves are tax free, but accumulated interest earned during the accumulation period is taxable.
Question: is the policyowner getting a 1099 when the interest is incurred, whether the owner withdraws it or not?
Study manual specifically states: Any interest paid on them is taxable income in the year the interest is credited to the policy, whether or not it is actually received by the policyowner.