Insurance license chapter 4

The benefit is received tax free

A corporation is the owner and beneficiary of the key person life policy. If the corporation collects the policy benefit, then

The purpose of the group was to purchase life insurance

A group of 15 skydivers met at a seminar and began talking about life insurance during a break because it was expensive to get individual life insurance, they decide to band together to form a small group so that they could qualify for group life insurance. After they applied for group life insurance, they were rejected. Why?

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

Buy-sell agreement

All of the following are personal uses of life insurance EXCEPT

The plan is funded by permanent insurance only

All of the following are true of key person insurance EXCEPT

Welfare benefits

All of the following benefits are available under Social Security EXCEPT

$10,000 no tax consequences

An employee quits her job where she has a balance of $10,000 in her qualified plan. If she decides to do a direct transfer from her plan to a Traditional IRA, how much will be transferred from one plan administrator to another and what is the tax consequence of a direct transfer

A portion of the benefit up to a limit is tax free; the rest is taxable income

An individual has been diagnosed with Alzheimers'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?

100% participation of members is required in noncontributory plans

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?

$3,000

If $100,000 of life insurance proceeds were used in a settlement option, which paid $13,000 per year for ten years, which of the following would be taxable annually?

A qualified plan for a small business

If a company has a Simplified Employee Pension plan, what type of plan is it?

Premiums paid by an a $30,000 group term life insurance plan for employees

In which of the following instances would the premium be tax deductible?

Any form of life insurance

Partners in a business enter into a buy-sell agreement to purchase life insurance which states that should one of them die prematurely, the other would be financially able to buy the interest of the deceased partner. What type of insurance policy may be used to fund this agreement?

Unemployment income

Social Security was created to provide all of the following benefits EXCEPT

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)

The earnings in a qualified plan accumulate tax deferred

Which of the following best describes the tax advantage of a qualified retirement plan?

It needs IRS approval

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

Have attained fully insured status

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

Premiums are not tax deductible as a business expense

Which of the following is correct concerning the taxation of premiums in a key- person life insurance policy?

Dividends are not taxable

Which of the following is true regarding taxation dividends in participating policies?