Life Insurance exam

Which of the following statements regarding the taxation of Modified Endowment Contracts is FALSE? a) Policy loans are taxable distributions. b) Accumulations are tax deferred. c) Withdrawals are not taxable. d) Distributions before age 59 1/2 incur a 10% penalty on policy gains.

C

All of the following would be different between qualified and nonqualified retirement plans EXCEPT a) Taxation of withdrawals b) Taxation of contributions c) IRS approval requirements d) Taxation on accumulation

D

Credit Life insurance a) Has a maximum term for insurance of 20 years. b) Insures the life of a debtor. c) Is purchased on an installment basis. d) Insures the life of a creditor.

B

Which of the following is the closest term to an authorized insurer? a) Legal b) Admitted c) Certified d) Licensed

B

When is the earliest a policy may go into effect? a) When the first premium is paid and the policy has been delivered b) When the insurer approves the application c) After the underwriter reviews the policy d) When the application is signed and a check is given to the agent

D

Which is INCORRECT concerning a Section 457 Deferred Compensation plan? a) The deferred amount is paid upon death, disability, or retirement. b) It is a nonqualified plan. c) It is a means of deferring current income until later when the employee is in a lower tax bracket. d) It has a vesting requirement.

D

Which statement regarding insurable risks is NOT correct? a) Insurance cannot be mandatory. b) The insurable risk needs to be statistically predictable. c) An insurable risk must involve a loss that is definite as to cause, time, place and amount. d) Insureds cannot be randomly selected.

D