Natasha owns a whole life policy on her life in the amount of $$150,000.$ Her son, Jack, is the designated beneficiary. Each year, Natasha receives an annual statement from the insurance carrier reflecting the amount of policy dividends credited and the increase in the cash surrender value of the policy. Which of the following statements is true?

Question $8$ options:

$1)$

The dividends credited on the policy annually are income taxable at preferential qualifying dividend income tax rates.

$2)$

The dividends credited on the policy annually are income taxable at ordinary income tax rates.

$3)$

The annual increase in the policy's cash surrender value is income taxable at long term capital gains tax rates.

$4)$

The dividends credited on the policy annually are not income taxable.