EXam Fx Taxes, Retirement, and Other Insurance concepts 5-9-19

It determines if the insurance policy is an MEC.

What is the maid purpose of the Seven-pay Test?

A policyowner who is not the insured.

Who is a third-party owner?

The insured may choose to convert to term or permanent individual coverage

An employee is insured under her employer's group life plan. If she terminates her group coverage, which of the following statements is INCORRECT? A.) The insured would not need to prove insurability for a conversion policy. B.) The insured may convert coverage to an individual policy within 31 days. C.) The premium for individual coverage will be based upon the insured's attained age. D.) The insure may choose to convert to term or permanent individual coverage.

Settlement option

If an immediate annuity is purchased with the face amount at death or with the cash value at surrender, this would be considered a

Executive bonus

When an employer offers to give an employee a wage increase in the amount of the premium on a new life insurance policy, this is called a(n)

Third-party owner

is a legal term used to identify an individual or entity that is not an insured under the contract, but that has a legally enforceable right under it.

The employees receive individual policies

Which of the following is incorrect concerning a noncontributory group plan? A.) They help to reduce adverse selection against the insurer. B.) They require 100% employee participation. C.) The employer pays 100% of the premiums. D.) The employees receive individual policies.

An individual not covered by an employer-sponsored plan who has earned income

Who can make a fully deductible contribution to a traditional IRA?

The seller must be terminally ill.

Which of the following is NOT true of life settlements? A.) They could be sold for an amount greater than the current cash value. B.) They involve insurance policies with large face amounts. C.) The seller must be terminally ill. D.) They could be used for a key person coverage.

The insurer will pay 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 for 2 weeks. He dies in a freak accident on June 1. Which of the following statements best describes what will happen?

The employer can receive a current tax deduction for any contributions made to the plan.

All of the following statements concerning an employer sponsored nonqualified retirement plan are true EXCEPT A.) The plan is not approved for favorable tax treatment by the IRS. B.) The employer can receive a current tax deduction for any contributions made to the plan. C.) The plan is a legal method of accumulating money for retirement needs. D.) The plan can discriminate as to who may participate.

Viatical settlement

An insured under a life insurance policy has been diagnosed with a terminal illness and has 6 months to live. The insured knows that his financial state will worsen even more with the upcoming medical expenses. What option could the insured utilize?

Cost of training a replacement

A Key person insurance policy can pay for which of the following?

Buy-Sell agreement

A life insurance policy used to fund an agreement that contractually establishes the intent of someone to purchase a business upon the insured business owner's death is a

Premiums are determined by the age, sex and occupation of each individual certificate holder.

All of the following are characteristics of group life insurance EXCEPT A.) Individual covered under the policy receive a certificate of insurance. B.) Certificate holders may convert coverage to an individual policy without evidence of insurability. C.) Premiums are determined by the age, sex and occupation of each individual certificate holder. D.) Amount of coverage is determined according to nondiscriminatory rules.

It needs IRS approval

Which of the following is NOT true regarding a nonqualified retirement plan?