Definition of "Interest option"
Del McDaniel, Real Estate Agent
Coldwell Banker Residential Brokerage
Use of a life insurance policy dividend by the owner of a participating policy. Here the policy dividend is left with the insurance company to accumulate at a guaranteed minimum interest rate. Also, an interest option is a choice a beneficiary can make by leaving death proceeds with the insurance company to accumulate at interest. Interest earned under either option is subject to federal and state income taxes.
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