Zachary is considering disposing of his whole life insurance policy and he has reached out to his insurance agent, Andy, to help determine what the tax consequences may be.

Which of the following could cause an increase to the adjusted cost basis of ACB Zachary’s insurance policies?

1. The policy dividends which were paid to the Korean cash
2. The policy loan is taken against the cash surrender value of the policy
3. Interest paid on the policy loan which is deductible as an investment expense
4. The gains from the previous partial surrenders of the policy