Which of the following is true regarding taxes on nonqualified annuities?

Insurance

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Which of the following is true regarding taxes on nonqualified annuities?

a. Premiums are paid with pre-tax dollars and interest is tax-deferred.

b. Premiums are not tax-deductible and interest is taxable in the year it is earned.

c. Premiums are not tax-deductible, but interest is tax-deferred.

d. Premiums are paid with pre-tax dollars, but interest is taxable in the year it is earned.

Answer: c. Premiums are not tax-deductible, but interest is tax-deferred.

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