chapter 4

Who may contribute to an HR-10 plan

Only self-employed persons can contribute to an HR 10 plan

All of the following statements are true regarding group insurance except

Participants in the policy each receive a policy.

What are the personal uses of life insurance?

Survivor protection, estate creation and conservation, cash accumulation and liquidity

All of the following statements concerning the use of life insurance as an executive bonus are correct except

The policy is owned by the company. PS the policy is owned by the employee.

Which of the below statements is false concerning a modified endowment contract?

The policyholder can receive distributions at any time without being penalized

All of the following would be eligible to establish a Keogh retirement plan except

The president and employee of one's family's corporation. PS Keogh plans are for self-employed individuals and their employees

Social security is funded by a payroll tax imposed on a percentage of an employee's income. this percentage is called

The taxable wage base

which of the following is true regarding taxation of accelerated benefits under a life insurance policy?

They are tax free to terminally ill insured

Can a worker receive social security retirement benefits before age 65?

Yes, the qualifying worker can receive reduced benefits at age 62.

All of the following are examples of third-party ownership of a life insurance policy except

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

which of the following accurately compares business and personal life insurance?

both create an immediate payment upon the death of the insured.

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

buy-sell agreement

Carol is insured under her employer's group life insurance plan at her place of employment. All of the following statements about her coverage are true EXCEPT

carol could choose what type of insurance her conversion policy provided (term or Permanent)

Which of the following is an example of a non qualified retirement plan?

executive bonus plan

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

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

what is the primary purpose of a 401k plan

retirement

an immediate annuity purchased with he face amount at death or with he cash value at surrender can be referred as which of the following?

settlement option

how is social security funded

taxes imposed on a worker's earned income

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

the benefit is received tax free

all of the following are true of key person insurance except

the plan is funded by permanent insurance only

In order to qualify for conversion from a group life policy to an individual policy of the same coverage, a person must have been insured under the group plan for how many years?

5 years

The minimum number of credits required for partially insured status for social security disability benefits is

6 credits

In terms of Social Security, what is the interval spanning between the day when the youngest child of a family turns 16 and before the surviving spouse turns age 60 called?

Blackout Period

A partnership buy-sell agreement in which each partner purchases insurance on the life of each of the other partners is called a

Cross-purchase plan

All of the following statements are true regarding tax-qualified annuities except

Employer contributions are not tax deductible.

If taken as a lump sum, life insurance proceeds to beneficiaries are passed

Free of federal income taxation

The following are legitimate used of insurance in a business setting except

Funding against general company financial loss

What is the main purpose of the seven-pay test?

It determines if the insurance policy is an MEC

Which of the following is true of a qualified plan?

It has a tax benefit for both employer and employee.

what is the unique benefit life insurance has over other types of insurance?

It may perform the function of cash accumulation.

Which of the following is not true regarding a non qualified retirement plan?

It needs IRS approval

What is true concerning whole life

Lump-sum death benefits are not taxable.

What is a primary difference between an IRA and an SEP?

MUCH more money can be contributed to a sep

In a single employer group plan, what is the name of the policy issued to the employer?

Master contract