1. Under Pennsylvania inheritance tax law, life insurance proceeds paid to a named beneficiary on the decedent's life are:

Exempt from Pennsylvania inheritance tax

Pennsylvania exempts payments under life insurance policies on the decedent's life from inheritance tax.

2. Life insurance death benefits paid to a named beneficiary in a lump sum are generally:

Received income-tax-free

Lump-sum death benefits are generally received free of federal income tax by the beneficiary.

3. The growth of cash value inside a permanent life insurance policy is generally:

Tax-deferred while it remains in the policy

Cash value grows tax-deferred; a taxable gain may arise only if the policy is surrendered for more than its cost basis.

4. When annuity income payments are received, the portion representing investment earnings is:

Taxable as ordinary income

Earnings in an annuity are taxed as ordinary income when distributed; the exclusion ratio determines the taxable portion.