Taxes, Group Life, Government Insurance, and Other Insurance Concepts Chapter Quiz

What type of life insurance is most commonly used for group plans?

Annually renewable term.

Avoiding tax consequences when transferring assets from one IRA to another can be accomplished by which of the following?

Direct rollover from one plan to the other.

Which of the following terms is used to name the nontaxable return of unused premiums?

Dividend.

In a single employer group plan, what is the name of a document that is issued to the employer?

Master contract.

If $100,000 of life insurance proceeds were used in a settlement option which paid $13,000 per year for 10 years, which of the following amounts would be taxable annually?

$3,000.

Which of the following are Social Security benefits?

Retirement, disability, and survivors.

When a beneficiary in a life insurance policy receives payments consisting of both principal and interest portions, what will be taxed as income?

Interest only.

If a life policy does not pass the 7-pay test, that policy?

Becomes a Modified Endowment Contract.

The 10% early withdrawal penalty from an IRA can be waived for?

Catastrophic medical expenses.

In life insurance policies, cash value increases are?

Tax deferred.

Generally, the premium paid for personal life insurance is?

Not tax deductible.

For personal life insurance, the lump-sum death benefit is received?

Tax free.

Which of the following taxation principles applies to annuities?

Tax-deferred accumulation.

Which method is used to determine the taxable portion of each annuity payment?

The exclusion ratio.

Excess contributions to a Roth IRA are subject to what tax penalty?

6%.