Classify each of the following statements.
-Maggie purchased an insurance policy on Jim's life and designated Susan as the beneficiary.

Question

Quizplus · Accepted Answer

When Maggie purchases an insurance policy on Jim's life and designates Susan as the beneficiary, no taxable transfer occurs at the time of purchase. Gift and estate taxes typically apply to transfers of wealth either during an individual's life or at their death, but the act of purchasing an insurance policy for the benefit of another does not constitute a taxable transfer under these categories at the time of purchase.

Classify Each of the Following Statements