Life insurance Unit 2

And employee does not have to report any income with respect to what amount of group term life insurance coverage assuming the plan is not discriminatory

$50,000

Approximately what percentage of all life insurance in force in the United States is on a group bases

40%

Which of the following problems could be caused by the flexibility offered by universal life insurance policy

A death benefit reduction make calls the policy to be classified as a modified endowment contract

And increasing premium level death benefit term policy to age 65 is

A one year term policy renewable to age 65

Insures offer options that can make joint life particularly attractive which of the following options is not offered

A provision for the exchange under section 1035 of the joint life policy for a long term care insurance policy

A single premium life insurance policy issued before June 21, 1988 is grandfathered that is not subject to the Mac modified endowment contract tax rolls however it can lose this tax status if there is

And exchange a policy for another policy

A policy that originally is not a modified endowment contract will be subject to read testing if there is a material change in the contract which of the following would likely be a material change

And exchange of one policy for another policy and a 1035 exchange

All of the following items should be considered in relation to a joint life insurance policy except

And our own occupation definition of disability

For which of the following is use a single premium whole life insurance at least appropriate

As a good short-term tax-deferred investment

Which of the following is a disadvantage of a current assumption whole life policy

CAWLpolicy guaranteed maximum morality and expense rights

If I limited pay whole life insurance policy is determined to be a MEC modified endowment contract

Distributions including policy loans will likely be includable in income

Which of the following items are not treated as income first one distributed from a modified and down the contract

Dividends retained by the insured to premiums or other consideration for the contract

A policy that automatically increases the death benefit without evidence of insurability well typically vallate the MEC RULES

False

An insurance contract entered into before 1988 can never be considered a modified endowment contract

False

And a MECcontract ensuring a single insured there is a low no look back requirement

False

Because of the way that it is taxed a modified and down my contract is not considered a life insurance policy for tax purposes

False

Most universal life policies are insured with front and load charges rather than back and load charges

False

Once I policy is classified as a modified endowment contract with certain corrections it can be later treated as not a modified and down the contract

False

One of the advantages of group term insurance is that the premiums remain level on a pre-employee basis regardless of the ages of the employees

False

Term insurance is always the least expensive form of insurance regardless of the duration of needed coverage

False

Under erisa requirements n employee covered by a group term life contract must name his spouse as beneficiary if he is married

False

Variable life or variable universal life insurance as well stated to individuals desiring a minimum basic level of coverage

False

Universal life insurance is

Flexible premium adjustable death benefit current assumption policy

Which of the following statements about the tax aspects of ownership a variable life insurance is false

Games received our taxable at capital gains rates

If I term policy is convertible it means the policy

Gives the policyholder a contractual right to change the term policy for some other type of life insurance policy without evidence of insurability policy for some other type of in life insurance policy without evidence of insurability

I single premium current assumption life policy generally guarantees all the following except

I fix level of dividends will be paid throughout the term of the policy

Which of the following could never be treated as a modified endowment contract

I single premium policy that was entered onto on June 1, 1988

Level premium whole life insurance policies allow policy owners to borrow amounts under the policy typical loan provisions include which of the following requirements

If the policy is terminated the cash surrender value is reduced by any outstanding policy loans and unpaid interest

Important disadvantages of joint life include all of the following except

In business markets, joint life may eliminate rhe need for redundant coverage when the need is to insure the first death amoun severl lives

Advantages of ordinary level premium whole life include all the following except

Interest on policy loans is generally nondeductible

Hey survivorship life plan that involves a greater proportion of term insurance them permanent insurance

Is sensitive to changes in yields are interest rates

Which of the following is not an advantage of group term life insurance

It can be used as a standard investment option under the employees 401(k) plan

Group life insurance is a welfare benefit plan as a

It is subject to ERISA

Advantages of term in life insurance include all the following except

It is the most cost-effective when the duration of the needed protection is over 15 years

Which of the following accurately describes a disadvantage of survivorship life insurance

It provides no benefits at the first death unless a special rider is added

Which of the following statements is true regarding current assumption whole life insurance

Policy owners bear more risk of adverse trends in morality or expenses than if they own traditional whole life policies

If the investment performance of a variable universal life policy is poor

Policy owners may be required to pay additional premiums

Disadvantages of term insurance include all the following except

Proceeds are not part of a probated estate unless the state is named beneficiary

Which of the following types of life insurance allows the greatest amount of death benefit to be purchased for a set amount of premium

Term insurance level premium whole life insurance Limited pay whole life insurance single premium whole life insurance

Advantages of single premium life include all the following except

The amount of protection is low relative to the premium paid

Which item is not a key factor to be weighed and choosing the best variable life are variable universal life policy

The amount of the cash value guarantees

Insurance companies generally recover sales commissions and initially policy expenses from variable universal life policies within

The first 10 years

Surrendering a universal life policy results in considerable loss of the policy is a rendered during

The first 5 to 10 years

A limited pay whole life insurance policy with a short premium paying. Runs the risk of becoming a Mac modified endowment contract if

The insured pays the full annual premium and dividends are applied as additional premiums

Which of the following statements is true regarding current assumption whole life insurance

The insured promises to credit at least a minimum guarantee rate of interest

Which of the following statements regarding universal life insurance is not true

The policy is not susceptible to advertently becoming a modified endowment contract

A survivorship rider permits

The purchase of increase coverage on the insured if the light designated in the rider dies before the insured

Which of the following is true regarding the interest credited to universal life policies

The right used may be linked to a well known index of yields if it exceeds a minimum rate guaranteed in the policy

A modified endowment contract is a life insurance policy that has failed

The seven pay test

Which of the following is a characteristic of a level premium nonparticipating whole life insurance policy

There is a schedule of guaranteed cash values

I key feature of variable life insurance is

There is no guaranteed minimum cash value

An important use of joint life insurance has been

To fun buy sell agreements in closely held businesses

And which of the following situations what I level premium whole life insurance policy be appropriate

To provide funds for the continuation of a business through a buy sell agreement

Current assumption whole life insurance is generally a hybrid of easily

Traditional whole life and universal life insurance

A 10% penalty applies to certain distributions from life insurance policies that are treated as modified endowment contract

True

A term life insurance policy makes no promise to pay anything if the insured lives beyond the specific term

True

All universal life policies have a guaranteed minimum interest right generally ranging from 4 to 6%

True

As long as cash values are sufficient to cover policy charges a universal life policy owner may skip premium payments

True

Group life provides and after tax benefit for employees and a deduction for employers

True

Most group insurance is issued as yearly renewable term insurance

True

Most insurance companies do not offer renewable term policies to new applicants after a certain age which is usually between 60 and 70

True

One disadvantage of universal life is that policy owners there more risk of adverse trans and morality or expenses that if they own traditional whole life policies

True

Term life insurance is ideal for temporary need such as paying off funeral state and inheritance taxes

True

Variable life and variable universal life are especially suited for many business insurance situations where flexibility and growth of cash value are attractive features

True

Very well life is a whole life policy where the policy owners bear all investment risk

True

Which of the following statements regarding universal life insurance is true

Universal life allows policy owners to participate in favorable investment morality and expense experience of the company insurance policies

Which of the following statements about variable universal and variable life insurance death benefit is not true

Variable life and variable universal life bear no morality or expense risk

I significant advantage of a split Dollar plan using survivorship life instead of a single life policy is that

Very low table 38 rights are used to measure the pure insurance cost of survivorship like wow both insured's are alive instead of the higher PS 58 right