Chapter 4 Practice Questions

An insured has a Modified Endowment Contract. He wants to withdraw some money in order to pay medical bills. Which of the following is true?

He will not have to pay a penalty, if he is younger than 59 1/2 b) He cannot withdraw money from his MEC before age 59 1/2 c) He will have to pay a penalty if he is younger than 59 1/2 d) He will have to pay a penalty regardless of his age

What is the number of credits required for fully insured status for social security disability benefits?

40

The minimum number of credits required for partially insured status for social security disability benefits is

6 credits

All of the following are requirements of eligibility for social security disability income benefits EXCEPT

Being age 65

Which of the following is an eligibility requirement for all social security disability income benefits?

Have attained fully insured status

What is the main purpose of the Seven pay test?

It determines if the insurance policy is an MEC.

If a life insurance policy develops cash value faster than a seven-pay whole life contract, it is

Modified Endowment Contract

What is the official name for the Social Security program?

Old-Age Survivors and Disability Insurance

Social Security was created to provide all of the following benefits EXCEPT

Unemployment income

All of the following benefits are available under Social Security EXCEPT

Welfare benefits Social Security is an entitlement program, not a welfare program.

Which of the following statement regarding the taxation of Modified Endowment Contracts is FALSE?

Withdrawals are not taxable