Retirement and other insurance concepts
A key person insurance policy can pay for which of the following?
Costs of training a replacement
Which of the following would be considered a nonqualified retirement plan?
Split-dollar plan
An employee is joining a group insurance plan. in order to avoid having prove insurability, what must the employee do?
Join during open enrollment
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
Which of the following statements is TRUE concerning whole life insurance?
Lump-sum-death benefits are not taxable
In a single employer group plan, what is the name of the policy issued to the employer?
Master contract
Which of the following is NOT true regarding policy loans?
Money borrowed from the cash value is taxable
All of the following statements are true regarding group insurance EXCEPT
Participants in the policy each receive a policy
All of the following are characteristics of group life insurance EXCEPT
Premiums are determined by the age, sex and occupation of each individual certificate holder
Which of the following is correct concerning the taxation of premiums in a key-person life insurance policy
Premiums are not tax deductible as a business expense
What type of retirement account does not require the owner to start taking distributions at age 73?
Roth IRA
If an immediate annuity is purchased with the face amount at death or with the cash value at surrender, this would be considered a
Settlement option
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
All of the following employees may use a 403(b) plan for their retirement EXCEPT
The CEO of a private company
A corporation is the owner and the beneficiary of the key person life policy. if the corporation collects the policy benefit, then
The benefit is received tax free
Which of the following is an example of liquidity in a life insurance contact?
The cash value available to the policy owner
Who is the owner and beneficiary on a Key Person Life Insurance Policy?
The employee is the owner and the beneficiary
Which of the following is INCORRECT concerning a noncontributory group plan?
The employees receive individual polices
A11 of the following are general requirements of a qualified plan EXCEPT
The plan must provide an offset for social security benefits
All of the following statements concerning the use of life insurance as an Executive Bonus are correct EXCEPT
The policy is owned by the company
All of the following are characteristics of a group life insurance plan EXCEPT
There is a requirement to prove insurability on the part of the participants
Under a SIMLLE plan, which of the following is TRUE regarding taxation on both contributions on and earnings?
They are tax deferred until withdrawn
Social security was created to provide all of the following benefits EXCEPT
Unemployment Income
All of the following benefits are available under Social Security EXECPT
Welfare benefits
Which of the following statements regarding the taxation of Modified Endowment Contracts is FALSE?
Withdraws are not taxable
Which of the following is NOT an example of business use of Life Insurance?
Workers Comp.
Who can make a fully deductible contribution to a traditional IRA
an individual not covered by an employer-sponsored plan who has earned income
Which of the following is the best reason to purchase life insurance rather than an annuity?
to create an estate
If a retirement plan or annuity is "qualified", this means
It is approved by the IRS
An employee quits her job where she has a balance of $10,000 in her qualified plan. If she decides to do a direct transfer from her plan to a Traditional IRA, how much will be transferred from one plan administrator to another and what is the tax consequence of a direct transfer?
$10,000, no tax consequence
What is the main purpose of the seven-pay test?
It determines if the insurance policy is an MEC.
Group life insurance is a single policy written to provide coverage to members of a group. Which of the following statements concerning group life is CORRECT?
100% participation of members is required in noncontributory plans
In order to qualify for conversion from a group life policy that has been terminated to an individual policy of the same coverage, a person must have been insured under the group plan for how many years?
5 Years
To attain currently insured status under social security, a worker must have earned at least how many credits during the last 13 quarters?
6 credits
Who is a third-party owner?
A policyowner who is not the insured
An individual has been diagnosed with Alzheimer's disease. He is insured under a life insurance policy with the accelerated benefits rider. Which of the following is true regarding taxation of the accelerated benefits?
A portion of the benefit up to a limit is tax free; the rest is taxable income
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
Partners in a business enter into a buy-sell agreement to purchase life insurance, which states that should one of them die prematurely, the other would be financially able to buy the interest of the deceased partner. What type of insurance policy may be used to fund this agreement?
Any form of life insurance
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
SIMPLE Plans require all of the following EXCEPT
At least 1,000 employees.
Which of the following terms is used to name the nontaxed return of unused premiums?
Dividend
Which of the following is true regarding taxation of dividends in participating policies?
Dividends are not taxable
All of the following statements are true regarding tax-qualified annuities EXECPT
Employer contributions are not tax deductible
In an executive Bonus plan, who is the owner of the policy, and who is pays the premium?
Executive is the owner, and the executive pays the premium
All of the following are business uses of life insurance EXECPT
Funding against company's general financial loss.
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 have to pay a penalty if he in younger than 59 1/2
Two attorneys operate their practice as a partnership. They want to start a program through their practice that will provide retirement benefits for themselves and three employees. They would likely choose
HR-10 (Keogh Plan)
Which of the following is an eligibility requirement for all Social Security Disability Income benefits?
Have attainted fully insured status
A tax-sheltered annuity is a special tax-flavored retirement plan available to
certain groups of employees only
In group life policies, a certificate of insurance is given to
each insured person
