Chapter 3: Taxes, retirement, etc.

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 quits his job and converts his group policy to an individual policy; the premium for the individual policy will be based on his

Attained age

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

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

100%

All of the follwoing are true of the federal tax advatages of a qualified plan Except

At distrubution, all amounts recieved by the employee are tax free

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 is younger than 59 1/2

Traditional IRA contributions are tax deductible based on which of the following?

Owner's income

An employer has sponsored a qualified retirement plan for its employees where the employer will contribute money whenever a profit is realized. What is this called?

Profit sharing plan

If an employee wants to enter the group outside of the open enrollment period, to reduce adverse selection, the insurer may

Require evidence of insurability

A 403(b) plan, commonly referred to as a TSA, is available to be used by

Teachers and not for profit organization

A 60 year old participant in a 401k plan takes a distribution and rols it over to an IRA within 60 days. Which of the following is true?

The amount of the distribution is reduced by the amount of a 20% witholding tax

All of the follwing benefits are available under social security except

Welfare benefits

Which of the following is not true regarding a nonqualified retirement plan?

it needs IRS approval

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

master contract

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