Hank carries a $100,000 insurance policy on his life. Premiums paid over the years total $8,000. Dividends on the policy have totaled $6,000. Hank has left the dividends on the policy with the insurance company. During the current year, the insurance company credited $600 of interest on the accumulated dividends to Hank’s account.
a. How much income is Hank obligated to report in connection with the policy?
b. Would it make any difference if the accumulated dividends equaled $9,000 instead of $6,000?