Which of the following statements is (are) true with respect to the cash annuity settlement option?
I. The taxable portion of the distribution is subject to federal and state income taxes.
II. The option results in adverse selection against the insurer as those in poor health are more likely to take cash than to annuitize the funds.
A) I only
B) II only
C) both I and II
D) neither I nor II
Answer: C
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