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