Chapter 4 : Retirement and Other Insurance Concepts
An insured decides to surrender his $100,000 Whole Life policy. The premiums paid into the policy added up to $15,000. At policy surrender, the cash surrender value was $18,000. What part of the surrender value would be income taxable?
$3,000
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.
An individual has been diagnosed with Alzheimer's disease. He is insured under a life insurance policy with the accelerated benefit 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
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 requirements of eligibility for Social Security disability income benefits EXCEPT
Being age 65
All of the following employees may use 403(b) plan for their retirement EXCEPT
CEO of a private corporation
What does "liquidity" refer to in a life insurance policy?
Cash values can be borrowed at any time
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 attained fully insured status
If an insured surrenders his life insurance policy, which statement is true regarding the cash value of the policy?
It is only taxable if the cash value exceeds the amount paid for premiums.
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
A corporation is the owner and beneficiary of the key person life policy. If the corporation collects the policy benefit, then
The benefit is received tax free
All of the following would be eligible to establish a Keogh retirement plan EXCEPT
The president and employee of a family corporation
Which of the following insurance arrangements will be appropriate for a parent buying a life insurance policy on a child where the parent is the policyowner?
Third-party ownership
Who may contribute to a Keogh (HR-10) plan?
self-employed plumber
