Retirement and Other Insurance Concepts (Life/Health)
The advantage of qualified plans to employers is
tax-deductible contributions.
What percentage of a company's employees must take part in a noncontributory group life plan?
100%
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
The minimum number of credits required for partially insured status for Social Security disability benefits is
6 credits.
Which of the following is the required number of participants in a contributory group plan?
75%
The president of a manufacturing company has offered one of the company's officers a special individual annuity plan that is unavailable to lower-echelon employees. This plan would be funded with before-tax corporate dollars. and it does not meet government approval standards. This annuity plan is
A nonqualified annuity plan.
An individual has been diagnosed with Alzheimer's disease. He is insured under a life insurance policy with the accelerated benefits rider. Which of the following is true regarding taxation of the accelerated benefits?
A portion of the benetit Up to a limit is tax tree the rest is taxable income
What type of life insurance is most commonly used for group plans?
Annually renewable term
All of the following are TRUE of the federal tax advantages of a qualified plan EXCEPT
At distribution, all amounts received by the employee are tax free.
All of the following are requirements of eligibility for Social Security disability income benefits EXCEPT
Being age 65
Which of the following would describe a legal document which would dictate who can buy a deceased partner's share of a business and for what amount?
Buy-sell agreement
All of the following are personal uses of life insurance EXCEPT
Buy-sell agreement.
Which of the following statements concerning buy-sell agreements is true?
Buy-sell agreements are normally funded with a life insurance policy
What does "liquidity refer to in a life insurance policy?
Cash values can be borrowed at an time
A tax-sheltered annuity is a special tax-favored retirement plan available to
Certain groups of employees only
A key person insurance policy can pay for which of the following?
Costs of training a replacement
All of the following statements are true regarding tax-qualified annuities EXCEPT
Emblover contributions are not tax deductible
In the Executive Bonus plan, who is the owner of the policy, and who pays the premium?
Executive is the owner, and the executive pays the premium
All of the following are business uses of life insurance EXCEPT
Funding against company's general financial loss.
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 TRUE of a qualified plan?
It has a tax benefit for both employer and employee.
Which of the following is NOT true regarding a nonqualified retirement plan?
It needs IRS approval.
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.
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.
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 IRA purchased by a small employer to cover employees is known as a
Simplified Employee Pension plan
Which of the following would be considered a nonqualified retirement plan?
Split-dollar plan
A producer is helping a married couple determine the financial needs of their children in the event one or both should die prematurely. This is a personal use of life insurance known as
Survivor protection
Which of the following best describes the tax advantage of a qualiftied retirement plan?
The earnings in a qualified plan accumulate tax deferred
Which of the following best describes the tax advantage of a qualified retirement plan?
The earnings in a qualified plan accumulate tax deferred.
Which of the following is INCORRECT concerning a noncontributory group plan?
The employees receive individual policies
An employee quits his job on May 15 and doesn't convert his Group Life policy to an individual policy for 2 weeks. He dies in a freak accident on June 1. Which of the following statements best describes what will happen?
The insurer will pay the full death benefit from the group policy to the beneficiary.
An employee quits his job on May 15 and doesn't convert his Group Life policy to an individual policy tor 2 weeks. He dies in a freak accident on June 1. Which of the following statements best describes what will happen?
The insurer will pay the full death benefit from the group policy to the beneficiary.
All of the following are true of key person insurance EXCEPT
The plan is funded by permanent insurance only
All of the following are general requirements of a qualified plan EXCEPT
The plan must provide an offset for social security benefits.
All of the following statements concerning the use of lite insurance as an Executive Bonus are correct EXCEPT
The policy is owned by the company
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.
Which of the following best defines the "owner" as it pertains to life settlement contracts?
The policyowner of the life insurance policy
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 is NOT true of life settlements?
The seller must be terminally ill.
All of the following are characteristics of a group life insurance plan EXCEPT
There is a requirement to prove insurability on the part of the participants.
How are contributions to a tax-sheltered annuity treated with regards to taxation?
They are not included as income for the emplovee but are taxable upon distribution.
Under a SIMPLE plan, which of the following is TRUE regarding taxation on both contributions and earnings?
They are tax deferred until withdrawn
Which of the following is true regarding taxation of accelerated benefits under a life insurance policy?
They are tax free to terminally ill insured.
An employee is joining a group insurance plan. In order to avoid having to prove insurability, what must the employee do?
Join during the oven enrollment period
Death benefits payable to a beneficiary under a life insurance policy are generally
Not subject to income taxation by the Federal Government
Traditional IRA contributions are tax deductible based on which of the following?
Owner's income
All of the following statements are true regarding group insurance EXCEPT
Participants in the policy each receive a policy.
All of the following are characteristics of group life insurance EXCEPT
Premiums are determined by the age. sex and occupation of each individual certificate holder.
Which of the following is correct concerning the taxation of premiums in a key-person life insurance policy?
Premiums are not ray deductible as a business expense
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
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
Which of the following is the best reason to purchase life insurance rather than an annuity?
To create an estate
Which of the following statements regarding the taxation of Modified Endowment Contracts is FALSE?
Withdrawals are not taxable
The premiums paid by the employer in a business life insurance policy are
tax deductible by the employer.
Which of the following statements is TRUE concerning whole life insurance?
Lump-sum death benefits are not taxable.
In a single employer group plan, what is the name of the policy issued to the employer?
Master contract
Which of the following is NOT true regarding policy loans?
Money borrowed from the cash value is taxable.
