What distinguishes qualifying policies from non-qualifying policies?

Qualifying policies are specifically designed to meet certain criteria set out by tax legislation, which allows for the favorable treatment of their proceeds. One prominent feature of qualifying policies is that their proceeds, when paid out to beneficiaries, are generally exempt from income tax. This is in contrast to non-qualifying policies, which may result in tax liabilities on the proceeds received by the policyholder or beneficiaries. Therefore, the tax-exempt status of qualifying policies is a significant advantage, making option A the correct answer.

In the context of insurance products, qualifying policies must adhere to strict guidelines, often related to premium payments, benefit structure, and overall policy duration, to maintain their status. The other options, while discussing aspects of insurance policies, do not accurately capture the fundamental distinction based on tax treatment that sets qualifying policies apart from non-qualifying ones.