quiz 9

Which of the following is incorrect concerning quarters? a.Quarters are also known as credits which are based upon a specified dollar amount. b.The number of quarters earned under social security determines eligibility for the different programs. c.The maximum quarters than can be earned in a year is 4. d.To be fully insured you must earn at least 1 credit being at age 21 for each year, so at 24 you would only need 4 credits to be fully insured.

d.To be fully insured you must earn at least 1 credit being at age 21 for each year, so at 24 you would only need 4 credits to be fully insured.

All of the following would qualify for a Keogh plan except: a.Self employed using a defined contribution plan. b.Owners of an incorporated business. c.Partnership. d.Self employed using a defined benefit plan.

b.Owners of an incorporated business.

How much is the one time death benefit from social security? a.$255 b.$555 c.$155 d.$1,255

a.$255

Within how many days must an employer give a terminated employee notice to convert his life policy? a.15 b.31 c.10 d.25

a.15

Which of the following statements about 401K plans is incorrect? a.401Ks are known as a cash or deferred account or CODA. b.401Ks may also allow voluntary, after tax contributions by employees. c.401Ks are defined contribution plans. d.Deferred contributions are made on a pre tax basis.

a.401Ks are known as a cash or deferred account or CODA.

Which of the following is not a requirement for eligibility in an employer plan? a.Employees must be 18 years of age or older. b.Plan must not discriminate against rank and file employees. c.If plan is 100% vesting, then employees must have 2 years of service. d.must have completed 1 year of service with the employer.

a.Employees must be 18 years of age or older.

The number of credits required for fully insured status is: a.60 b.40 c.10 d.20

b.40

Which of the following are not regulatory requirements for dependents under group life plans? a.Insurance amounts cannot be more than 100% of the employee`s life insurance. b.A dependent may be covered up to age 18 under normal circumstances. c.75% of the insured employees must elect to cover one or more dependents for insurance to be extended to dependents. d.A dependent may be covered beyond age 22 if dependent is handicapped.

b.A dependent may be covered up to age 18 under normal circumstances.

This provision allows you to exchange an existing insurance or annuity contract for a newer contract without having to pay taxes on the accumulation in your old contract. a.Surrender provision b.Internal revenue code replacement c.1035 exchange d.The 618 & 620 exchange provision

c.1035 exchange

What qualified retirement plan is a defined contribution plan with pre tax contributions that uses annuities and mutual funds only for investment options? a.401K b.457 Plan c.ESOP d.403B

d.403B

A widow can begin to receive full social security retirement benefits at age: a.59 1/2 b.62 c.60 d.65

d.65

Which of the following is not a major difference between social and private insurance? a.Private insurance benefits are mandated by law. b.Social insurance doesn`t try to be equally fair to everyone. c.Social participation is both automatic and mandatory for all eligible citizens. d.The government is a monopoly regarding insurance.

a.Private insurance benefits are mandated by law.

The incorrect statement pertaining to TSAs would be: a.TSAs are available to employees of certain nonprofit organizations and schools, such as a nursing student. b.Teachers participating in a TSA do not pay current taxes on their contributions. c.Participants in a TSA are taxed on benefits when received. d.TSAs are not available to any worker.

a.TSAs are available to employees of certain nonprofit organizations and schools, such as a nursing student.

The period of time following the youngest child`s 16th birthday until the surviving parent is eligible is called: a.The blackout period b.The corridor period c.The frozen benefit period d.The FEGLI period

a.The blackout period

When would life insurance proceeds be subject to federal or state income taxes? a.When the policy is transferred for money. b.When the insured and primary beneficiary die at the same time. c.Never. Death benefits are always income tax free. d.When the policy contains cash value.

a.When the policy is transferred for money.

All of the following should be eligible to establish a Keogh retirement plan, except: a.An independent insurance agent for their agency. b.A family owned corporation for the benefit of their employees. c.A sole proprietor of an ice cream shop. d.A partnership.

b.A family owned corporation for the benefit of their employees.

Which statement concerning a Roth IRA is not incorrect? a.Both traditional and Roth IRA distributions must begin by age 701/2. b.Contributions are not deductible. c.Only those younger than 701/2 can contribute to their traditional or Roth IRA. d.Individuals can contribute 100% of earned income up to a limit in both a traditional IRA and a Roth IRA.

b.Contributions are not deductible.

The following are IRS requirements for qualified retirement plans except: a.The plan must be written and communicated to employees. b.The plan must have a vesting requirement just for the officers and stockholders. c.The plan must be approved by the IRS. d.The plan must be permanent.

b.The plan must have a vesting requirement just for the officers and stockholders.

Each of the following would be able to deduct the premiums from a life policy from taxes except: a.When a policy is owned by a charitable organization. b.When the premiums are paid from a company bonus. c.A company purchasing group term life for employees. d.A company paying premiums for employees as a bonus or incentive.

b.When the premiums are paid from a company bonus.

Which of the following statement about profit sharing plans is incorrect? a.Designed to encourage productivity and to reward employees with part of the company`s profits. b.Yearly earnings are fully taxable in the year received. c.One of the most popular types of qualified defined contribution plans. d.Contributions accumulate tax free until withdrawn.

b.Yearly earnings are fully taxable in the year received.

Vesting is best described as: a.The employee's right to withdraw the funds without penalty. b.The employee's right to eligibility in the retirement plan. c.An employee's right to ownership of the funds contributed by the employer. d.The right of the employee's spouse or dependents to be included in the employee's retirement benefits.

c.An employee's right to ownership of the funds contributed by the employer.

Which of the following statements is correct? a.Annuities have surrender charges and life insurance does not. b.Both the annuity and life insurance grow tax-deferred so they will accumulate at rate. c.Annuities do not pass tax-exempt however life insurance does. d.Annuities have a stepped up in basis at death and life insurance does not.

c.Annuities do not pass tax-exempt however life insurance does.

All the following characteristics of group life policies are correct except: a.Organization of the group must be for a purpose other than purchasing life insurance. b.Individuals do not have to show evidence of insurability. c.Underwriting is based on the groups age and average health condition. d.To be eligible as a group at least 2 people must be organized as a group.

c.Underwriting is based on the groups age and average health condition.

A defined contribution plan is a qualified retirement plan in which: a.contributions are not defined, but the ultimate benefit to be paid out is not defined. b.contributions are defined as well as the ultimate benefit. c.contributions are defined, but the ultimate benefit to be paid is not. d.contributions are not defined, nor is the ultimate benefit.

c.contributions are defined, but the ultimate benefit to be paid is not.

Annuity benefits are a combination of principal and interest. What is the taxation status of the principal? a.Neither are correct statements. b.If annuity was purchased with pre-tax dollars then both the interest and principal are taxable. c.If the annuity was purchased with after tax dollars then the interest is taxable and the principal is not. d.Both are correct statements

d.Both are correct statements

Which of the following is not a major type of social security disability coverage? a.Supplemental Security Income. b.Disability Insurance Benefits. c.Disabled Widow or Widower. d.Disabled Adult Benefits.

d.Disabled Adult Benefits.

All monthly retirement benefits can be paid to the following family members except: a.Spouse of the worker aged 62 or older. b.Former spouse of the worker if age 62 or older. c.Disabled children. d.Married children under age 19 if still in school.

d.Married children under age 19 if still in school.

All the following statements about group life insurance policies are false except: a.Participants are not issued certificates of insurance that show proof of insurance. b.participants are each issued a master contract. c.Each participant is in complete control of the policy. d.The employer is the master policy holder.

d.The employer is the master policy holder.

Which of the following would generate a taxable situation? a.The policyowner changes their dividend option from paid up additions and now receives their dividend in cash. b.None of the above would generate a taxable situation. c.The policyowner takes a $10,000 loan from the $25,000 in cash value. d.The policyowner surrenders the policy and receives $15,000 in cash value in which they paid $12,000 in premiums.

d.The policyowner surrenders the policy and receives $15,000 in cash value in which they paid $12,000 in premiums.

Of the following correct statements concerning the conversion privilege of group term life insurance which is not correct? a.Conversion can be exercised regardless of insurability. b.Upon conversion the employee/member pays premiums based on their attained age. c.An insured employee/member has 31 days to convert from the date of termination from the group plan. d.There is no coverage during the conversion period if the employee/insured has decided not to exercise their right to convert.

d.There is no coverage during the conversion period if the employee/insured has decided not to exercise their right to convert.