Chapter 4 Quiz

If an insured worker has earned 40 quarters of coverage, the worker's status under Social Security disability is

Fully insured.

Which of the following is an eligibility requirement for all Social Security Disability Income benefits?

Have attained fully insured status

What percentage of a company's employees must take part in a noncontributory group life plan?

100%

Which of the following is the best reason to purchase life insurance rather than annuities?

To create an estate

What is the name of the insured who enters into a viatical settlement?

Viator

When do full Social Security retirement benefits begin?

When the worker reaches age 65 and has earned the required amount of work credits.

When the owner of a $250,000 life insurance policy died, the beneficiary decided to leave the proceeds of the policy with the insurance company and selected the Interest Settlement Option. If at the time of withdrawal the interest paid was $11,000, the beneficiary would be required to pay income tax on

$11,000.

The minimum number of credits required for partially insured status for Social Security disability benefits is

6 Credits.

Who is a third-party owner?

A policyowner who is not the insured

All of the following are examples of third-party ownership of a life insurance policy EXCEPT

An insured borrows money from the bank and makes a collateral assignment of a part of the death benefit to secure the loan.

All of the following are TRUE of the federal tax advantages of a qualified plan EXCEPT

At distribution, all amounts received by the employee are tax free.

In terms of Social Security, what is the interval spanning between the day when the youngest child of a family turns 16 and before the surviving spouse turns age 60 called?

Blackout Period

In a direct rollover, how is the money transferred from one plan to the new one?

From trustee to trustee

Which of the following is TRUE of a qualified plan?

It has a tax benefit for both employer and employee.

If a retirement plan or annuity is "qualified," this means

It is approved by the IRS.

Which of the following terms means a result of calculation based on the average number of months the insured is projected to live due to medical history and mortality factors?

Life expectancy

An employee has group life insurance through her employer. After 5 years, she decides to leave the company and work independently. How can she obtain an individual policy?

She can convert her group policy to an individual policy without proof of insurability within 31 days of leaving the group plan.

Which of the following would be considered a nonqualified retirement plan?

Split-dollar plan

The advantage of qualified plans to employers is

Tax-deductible contributions.

All of the following statements are TRUE concerning Debtor Groups EXCEPT

The amount of insurance on the life of any debtor may exceed the greater of the scheduled or actual amount of unpaid indebtedness to the creditor.

Which of the following is an example of liquidity in a life insurance contract?

The cash value available to the policyowner

Who is the owner and who is the beneficiary on a Key Person Life Insurance policy?

The employer is the owner and beneficiary.

All of the following are true of key person insurance EXCEPT

The plan is funded by permanent insurance only.

Which of the following insurance arrangements will be appropriate for a parent buying a life insurance policy on a child where the parent is the policyowner?

Third-party ownership