Unit 10 quiz

The amount of an annuity payout option or a life insurance settlement option that is taxable gain is determined by using

Exclusion ratio

All of the following statements regarding tax treatment of group life insurance are true except

Group life insurance premiums paid by the employer are not tax deductible as a business expense

All of the following statements regarding taxation of annuities are correct except

If death occurs during accumulation period, proceeds paid in a lump sum to the beneficiary are never taxable

Billy is receiving the proceeds of a life insurance policy as an income stream over a period of several years. What part of the money will be subject to tax?

Only the part that represents income earned on the original death benefit

All of the following statements regarding tax treatment of individual life insurance policies are correct except

Premiums are tax deductible

None of the following premiums are tax deductible for a business except

Premiums paid for an executive bonus plan

What is the name of the test that is done on a life insurance policy to see if it's premiums exceed those needed to fully pay up a death benefit with seven level annual payments?

Seven pay test

All of the following statements regarding a MEC are true except

Withdrawals are taxed on a first in first out basis

an individual choose to receive money from their annuity during the accumulation period. What is the penalty tax that must be paid in addition to regular taxes due on the taxable amount received?

10%

For accelerated death benefits to receive the same tax treatment as regular death benefits the insured must be certified to have an illness or physical condition that can reasonably be expected to result in death within

24 months

Which of the following would not qualify as a 1035 exchange?

An annuity contract to a life insurance policy

The penalties assessed against MECs primarily affect

money taken out of the policy

As a general rule, for federal tax purposes

neither life insurance nor annuity premiums is tax deductible

For tax purposes, which of the following are considered to be a return of a portion of the premium paid for the policy?

Dividends