Unit 10 quiz
The amount of an annuity payout option or a life insurance settlement option that is taxable gain is determined by using
Exclusion ratio
All of the following statements regarding tax treatment of group life insurance are true except
Group life insurance premiums paid by the employer are not tax deductible as a business expense
All of the following statements regarding taxation of annuities are correct except
If death occurs during accumulation period, proceeds paid in a lump sum to the beneficiary are never taxable
Billy is receiving the proceeds of a life insurance policy as an income stream over a period of several years. What part of the money will be subject to tax?
Only the part that represents income earned on the original death benefit
All of the following statements regarding tax treatment of individual life insurance policies are correct except
Premiums are tax deductible
None of the following premiums are tax deductible for a business except
Premiums paid for an executive bonus plan
What is the name of the test that is done on a life insurance policy to see if it's premiums exceed those needed to fully pay up a death benefit with seven level annual payments?
Seven pay test
All of the following statements regarding a MEC are true except
Withdrawals are taxed on a first in first out basis
an individual choose to receive money from their annuity during the accumulation period. What is the penalty tax that must be paid in addition to regular taxes due on the taxable amount received?
10%
For accelerated death benefits to receive the same tax treatment as regular death benefits the insured must be certified to have an illness or physical condition that can reasonably be expected to result in death within
24 months
Which of the following would not qualify as a 1035 exchange?
An annuity contract to a life insurance policy
The penalties assessed against MECs primarily affect
money taken out of the policy
As a general rule, for federal tax purposes
neither life insurance nor annuity premiums is tax deductible
For tax purposes, which of the following are considered to be a return of a portion of the premium paid for the policy?
Dividends