Life insurance 4

To attain currently insured status under social security, a worker must have earned at least how many credits during the last quarters? A) 4 credits B) 6 credits C) 10 credits D) 40 credits

B) 6 credits

Which of the following terms is used to name the non taxed return of unused premiums? A) Dividend B) Premium return C) Interest D) Surrender

A) Dividend

What does "liquidity" refer to in a life insurance policy? A) The policyowner receives dividend checks each year B) The insured receives payments each month in retirement C) Cash values can be borrowed at any time D) The death benefit replaces the assets that would have accumulated if the insured had not died

C) Cash values can be borrowed at any time

What type of life insurance is most commonly used for group plans? A) Whole life B) Flexible premium whole life C) Decreasing term D) Annually renewable term

D) Annually renewable term

Which of the following is not an example of a business use of life insurance? A) Buy sell funding B) Executive bonuses C) Key person D) Workers compensation

D) Workers compensation

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 A) Aleatory contract B) Executive bonus C) Key person policy D) Fraternal association

B) Executive bonus

Which of the following is an example of liquidity in a life insurance contract? A) The money is a savings account B) The cash value available to the policy owner C) The death benefit paid to the beneficiary D) The flexible premium

B) The cash value available to the policy owner

An individual has been contributing to a retirement account after taxes are taken out of his paycheck. His financial adviser told him that he will be allowed to make contributions after age 70 half. The account owner does not have to pay taxes on the growth of his account. What type of retirement account is it? A) Roth IRA B) 403(b) plan C) Simplified Employee Pension Plan D) Traditional IRA

A) Roth IRA

A producer is helping a married couple determine the financial needs of their children in the event one or both should die prematurely. This is a personal use of life insurance known as A) Survivor protections B) Life planning C) Survivor ship insurance D) Juvenile protection provision

A) Survivor protections

Which of the following is not true regarding policy loans? A) A policy loan may be repaid after the policy is surrendered B) Money borrowed from the cash value is taxable C) Policy loans can be repaid at death D) An insurer can charge interest on outstanding policy loans

B) Money borrowed from the cash value is taxable

Which of the following is true regarding taxation of accelerated benefits under a life insurance policy? A) There is a 10% penalty for early distribution of the death benefit B) They are tax free to terminally ill insured C) They are always taxable to chronically ill insured D) They are always taxed

B) They are tax free to terminally ill insured

Which of the following describes the tax advantage of a qualified retirement plan? A) The earnings in the plan accumulate tax deferred B) Distributions prior to age 59 half are tax deductible C) Employer contributions are deductible as a business expense when the employee receives benefits D) Employer contributions are not taxed when paid out to the employee

A) The earnings in the plan accumulate tax deferred

Which of the following in 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 % of the premiums D) The employees receive individual policies

D) The employees receive individual policies

Which of the following statements regarding the taxation of Modified Endowment Contracts is False? A) Distributions before age 59 half incur a 10% penalty on policy gains B) Policy loans are taxable distributions C) Accumulations are tax deferred D) Withdrawals are not taxable

D) Withdrawals are not taxable

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? A) 100% participation of members is required in noncontributory plans B) Each member covered receives a policy C) Coverage cannot be converted when an individual leaves the group D) Premiums are determined by age, occupation, and individual underwriting

A) 100% participation of members is required in noncontributory plans

All of the following are business uses of life insurance except A) Funding business continuation agreements B) Funding against general company financial loss C) Compensating executives D) Funding against financial loss caused by the death of a key employee

B) Funding against general company financial loss

Which of the following would describe a legal document which would dictate who can buy a deceased partner's share of a business and for what amount? A) Split dollar agreement B) Buy sell agreement C) Profit and loss agreement D) Key person agreement

B) Buy sell agreement

An employee quits her job where she has a balance of $10,000 in her qualified plan. The balance was paid out directly to the employee in order for her to move the funds to a new account. If she decides to rollover her plan to a Traditional IRA, how much will she receive from the plan administrator and how long does she have to complete the tax-free rollover? A) $8,000, 30 days B) $10,000, 60 days C) $10,000, 30 days D) $8,000, 60 days

D) $8,000, 60 days

Who can make a fully deductible contribution to a traditional IRA? A) Anybody: all IRA contributions are fully deductible regardless of income level B) Someone making contributions to an educational IRA C) A person whose contributions are funded by a return investment D) An individual not covered by an employer sponsored plan who has earned income

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

Which of the following is NOT true regarding a nonqualified retirement plan? A) It needs IRS approval B) Contributions are not currently tax deductible C) It can discriminate in benefits and selecting participants D) Earning grow tax deferred

A) It needs IRS approval

Which of the following statements concerning buy-sell agreements is true? A) Benefits received are considered income taxable B) Buy sell agreements pay in the event of a medical emergency C) Buy sell agreements are normally funded with a life insurance policy D) Premiums paid are deductible as as business expense

C) Buy sell agreements are normally funded with a life insurance policy

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

C) The seller must be terminally ill

All of the following statements concerning the use of life insurance as an Executive Bonus are correct EXCEPT A) Any type of insurance policy may be used B) The employer pays a bonus to a selected employee to fund the policy C) It is considered a nonqualified employee benefit D) The policy is owned by the company

D) The policy is owned by the company

Which of the following is the best reason to purchase life insurance rather than annuities? A) To create regular income payments B) To liquidate a sum of money over a lifetime C) To create an estate D) To liquidate a sum of money over a period of years

C) To create an estate

Which of the following would be considered a nonqualified retirement plan? A) 401(K) B) Keogh plan C) Roth IRA D) Split dollar plan

D) Split dollar plan

An internal Revenue Code provision that specifically provides for an individual retirement plan for public school teachers is a A) 403(b) plan (TSA) B) Keogh plan C) Roth IRA D) SEP

A) 403(b) plan (TSA)

The premiums paid by the employer in a business life insurance policy are A) Tax deductible by the employee B) Always taxable to the employee C) Never taxable to the employee D) Tax deductible by the employer

D) Tax deductible by the employer

Which of the following terms is used to name the nontaxed return of unused premiums? A) Interest B) Surrender C) Dividend D) Premium return

C) Dividend

Which of the following is the required number of participants in a contributory group plan? A) 50% B) 75% C) 100% D) 25%

B) 75%

Which of the following statements concerning buy-sell agreements is true? A) Buy-sell agreements pay in the event of a medical emergency B) Buy-sell agreements are normally funded with a life insurance policy C) Premiums paid are deductible as a business expense D) Benefits received are considered income taxable

B) Buy-sell agreements are normally funded with a life insurance policy

An employer has sponsored a qualified retirement plan for its employees where the employer will contribute money whenever a profit is realized. What is this called? A) HR 10 plan B) Profit sharing plan C) 401(k) plan D)Tax-sheltered account plan

B) Profit sharing plan

Which of the following applicants would not qualify for Keogh plan? A) Someone who works for self employed individual B) Someone who works 400 hours per year C) Someone who has been employed for more than 12 months D) Some who is over 25 years of age

B) Someone who works 400 hours per year

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

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

Who can make a fully deductible contribution to a traditional IRA? A) Anybody, all IRA contributions are fully deductible regardless of income level B) Someone making contributions to an education IRA C) A person whose contributions are funded by a return on investment D) An individual not covered by an employer sponsored plan who has earned income

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

In a single employer group plan, what is the name of the policy issued to the employer? A) Certificate of insurance B) Employer insurer contract C) Certificate of authority D) Master contract

D) Master contract

Which of the following statements concerning a Simplified Employee Pension plan (SEP) is incorrect? A) SEPs allow the employer to make annual tax deductible contributions up to 25% of an employees earned income B) SEPs have a higher deductible contribution limit than an IRA C) Employer contributions are not included in the employee's gross income D) SEPs are suitable for large companies

D) SEPs are suitable for large companies