Exam FX: Taxes, Retirement, and other Insurance Concepts

It is only taxable if the cash value exceeds the amount paid for premiums.

If an insured surrenders his life insurance policy, which statement is true regarding the cash value of the policy?

An insured borrows money from the bank and makes a collateral assignment of a part of the death benefit to secure the loan.

All of the following are examples of third-party ownership of a life insurance policy EXCEPT A.) When an insured purchase a new home, the insured made an absolute assignment of a life insurance policy to the mortgage company B.) An insured borrows money from the bank and makes a collateral assignment of a part of the death benefit to secure the loan. C.) An insured couple purchases a life insurance policy insuring the life of their grandson. D.) A company purchases a life insurance policy on their manager, who is an important part of the operation

Are subject to vesting requirement

Employer contributions made to a qualified plan

Old Age Survivors Disability Insurance

What is the official name for the Social Security program?

Retirement

What is the primary purpose of a 401(K) plan?

Generally not taxed as income

Life insurance death proceeds are

The CEO of a private corporation

All of the following employees may use a 403 (b) plan for their retirement EXCEPT A.) The vice president of a charitable organization B.) The CEO of a private corporation. C.) A school bus driver. D.) A part-time classroom aide.

$3,000

An insured decides to surrender his $100,000 whole life policy. The premiums paid into the policy added up to $15,000. At policy surrender, the cash surrender value was $18,000. What part of the surrender value would be income taxable?

The cash value available to the policyowner

Which of the following is an example of liquidity in a life insurance contract?

For 31 days

When an employee terminates coverage under a group insurance policy, coverage continues in force

At distribution, all amounts received by the employee are tax free.

All of the following are TRUE of the federal tax advantages of a qualified plan EXCEPT A.) Employee and employer contributions are not counted as income to the employee for income tax purposes. B.) At distribution, all amounts received by the employee are tax free. C.) Employer contributions are tax deductible as ordinary business expense. D.) Funds accumulate on a tax-deferred basis

Tax deductible by the employer.

The premiums paid by the employer in a business life insurance policy are

3

Under SIMPLE plans, participating employees may defer up to a specified amount each year, and the employer then makes a matching contribution up to an amount equal to what percent of the employee's annual wages?

Annually renewable term

What type of life insurance is most commonly used for group plans?

Have attained fully insured status

Which of the following is an eligibility requirement for all Social Security Disability Income benefits?