Retirement and other insurance concepts LIFE

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who owns a group life insurance contract

the employer (also known as the sponsor of the group)

when planning for survivor protection in life insurance, what needs to be considered

the insureds current assests, liabilities, and survivors needs

if a retirement plan is qualified, what does that mean

the plan has favorable tax treatment

what is the primary purpose of a 401(k) plan

provide retirement income

what are the three types of social security benefits

retirement, disability, and survivors

what are the personal uses of life insruance

survivor protection, estate creation, and conservation, cash accumulation and liquidity

what are the consequences of withdrawing funds from a traditional IRA prior to the age of 59 1/2

10% penalty

what is the penalty for excessive contributions to a traditional IRA

6%

what qualified plan is suitable for the self employed

HR-10 or Keogh

what are some examples of qualified plans

IRA, 401(k), HR10 (keogh), SEP, SIMPLE

what is the name for an overfunded life insurance policy

a modified endowment contract (MEC)

whom may contribute to an HR-10 plan

a self-employed individual

who would be considered a third-party owner

an individual or entity who is not the insured

group life insurance policies are written as what type of insurance

annually renewable term

what does liquidity mean in a life insurance policy

availability of cash value

According to the taxation rules of life insurance policies, how are cash value increases taxed?

cash value growth is tax deferred

why are dividends in life insurance policies not taxable

dividends are not considered income for tax purpose; they are a return of unused premium

what is required to qualify an individual to contribute to a traditional IRA

earned income

for a retirement plan to be qualified, it must be designed for whose benefit

employees

who qualifies for tax-sheltered annuities, or 403 (b) plans

employees of nonprofit organizations under section 501 (c)(3) and employees of public school systems

life insurance may be used to pay state inhertiance taxes and federal estate taxes eliminating the need to sell assets from the estate. what is this called

estate conservation

what is the main advantage of converting from group life insurance to individual coverage

evidence of the insurability

what type of policy is typically issued without proof of insurability from the insured

group policy

upon surrender of a life insurance policy, what portion of the cash value will be taxed

only the portion in excess of the premium paid

what is the main purpose of the 7-pay test

to determine if a life insurance policy is a modified endowment contract

what type of policy issues certificate of insurance to the insureds

group policy

what are the characteristics of the group that underwriters will consider before issuing a group life policy

groups purpose, size, financial strength and turnover

what is the general taxation rule for death benefits payable to the beneficiary of a life insurance policy

death benefits are generally not subject to income taxes

in what form of payment must the contributions to a traditional IRA be made

in cash (or cash equivalents)

if the beneficiary of a life insurance policy receives death benefit payments that consist of principal and interest, which portion, if any, will be taxed

interest only

SIMPLE plans are available to groups of how many employees

no more than 100

in qualified plans, are employer contributions taxed as income to the employees

no, employer contributions are not taxed as income to the employees

is the death benefit of a life insurance policy taxed to the beneficiary if its received as a lump sum

no, lump sum benefits are received tax free

when would life insurance policy proceeds be included in the insureds taxable estate

when there is an incident of ownership at the time of death

if an insured terminates membership in group life insurance, to what type of insurance can the insured convert the coverage

whole life


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