Chapter 6 Exam
Individuals who do not enroll during the initial enrollment period are considered ___________ enrollees. A Terminated B Late C Restricted D Prohibited
b
All of the following are correct regarding Key Employee Life Insurance, except: A Premiums are deducted from the employee's salary B The employer is the owner/applicant of the policy C The beneficiary (the employer) typically receives the death benefit free of federal income tax D The employer has an insurable interest in the key employee
a
Proceeds from a buy-sell agreement are received ___________. A Income tax free B Taxable as income C Only after the deceased's estate is settled and a proper valuation of their share of the business D Taxed to the extent that the amount exceeds $50,000
a
The Social Security blackout period for surviving spouses begins when the youngest child reaches age ______, and ends when the surviving spouse reaches age ______. A 16/60 B 16/62 C 18/65 D 18/60
a
What is the most important thing a buy-sell agreement establishes in the agreement? A The price of the business B The dollar amount of the premium C The amount of taxes owed D The insurance company issuing the coverage
a
All of the following are correct regarding Key Person Insurance, except: A The policy is source of funds to replace any lost revenue B The policy primarily insures the employee's retirement plan C The policy can be term or permanent D The policy is owned by the employer
b
Buy-Sell agreements are used for all of the following entities, except: A Sole Proprietorships B Large Public Corporations C Closely held businesses D Partnerships
b
What is the minimum requirement for currently insured status under the Social Security system? A Earned more than minimum wage B At least 6 credits earned in the 13 calendar quarters prior to death, disability, or is entitled to retirement benefits C Have 40 quarters of covered employment D Have not had a previous Social Security claim
b
A grandparent purchases a life insurance policy on a granddaughter this is an example of _________. A Wealth Transfer B Two Party Ownership C Third-Party Ownership D Key Person Insurance
c
A key person is typically all of the following, except: A Part of the management team B More highly paid C Not directly involved in sales, production, or service D Respected by customers, creditors, suppliers, or vendors
c
A partnership involving four equal partners is valued at $1,800,000. Under a Buy-Sell Agreement (Cross Purchase Plan), the amount of the policy on the life of each partner would be: A $900,000 B $450,000 C $150,000 D $1,800,000
c
Examples of third-party ownership include all of the following, except: A A life settlement B A viatical settlement C An adjustable life policy bought by Sam on Sam D A buy-sell agreement
c
To be considered fully insured under Social Security, a worker generally needs how many work credits? A 80 B 10 C 40 D 20
c
An individual can make changes to their group life insurance plan at any time for any one of the following reasons, except: A Change in employment status such as going to or from part-time to full-time B Getting married C Adding an eligible dependent D Changing health insurance carriers and deductibles
d
In which market are Certificates of Insurance issued to insured individuals? A Individual B Franchise C Industrial D Group
d
The Social Security Death Benefit is payable to the ____________. A The named beneficiary B The estate of the insured C The next of kin D The surviving spouse
d
Under an Entity Purchase Plan form of a Buy-Sell Agreement, the business is all of the following, except: A Premium payor B Beneficiary C Policyholder D Insured
d
What is the minimum requirement for currently insured status under the Social Security system? A Earned more than minimum wage B Have not had a previous Social Security claim C Have 40 quarters of covered employment D At least 6 credits earned in the 13 calendar quarters prior to death, disability, or is entitled to retirement benefits
d
When an underwriter evaluates the risks presented with a particular group life application, which of the following is considered the most important? A The plan sponsor's credit rating B The sales volume of the employer C The overall health of the group D Group size, turnover, average age and purpose of the group
d
With a Contributory Group Life Plan, what percentage of the employees must participate? A At least 50% B At least 60% C A full 100% D At least 75%
d
Who are the parties in a third-party life insurance ownership situation? A The policyowner, the insured, and the beneficiary B The insured, the insurer, and the beneficiary C The policyowner, the insured, and the insurer D The policyowner, the insurer, and the beneficiary
C
When is an entity buy-sell agreement plan used? A When the entity buys life insurance on each of the owners B When insurability is an issue C When the entity needs an additional tax deduction D When the owners are not in the financial position to buy the policies on their own
a
Which of the following is NOT an example of Third-Party Ownership? A A business owner buying a life policy on his own life B A parent purchasing a policy on the life of his or her child C A Key Employee Policy D A policy used to fund a Buy-Sell Agreement
a
The highest monthly Social Security retirement benefit would occur if started at age _______. A 62 B 70 C 65 D 60
b
The widow or widower's Social Security blackout period lasts until a surviving, non-remarried spouse reaches age ________. A 50 B 60 C 65 D 62
b
If enrolled in an accredited elementary or secondary school, a covered child can continue receiving Survivor Benefits up to what age? A 21 B 17 C 19 D 20
c
The arrangement under a Buy-Sell Agreement in which each party purchases insurance on the life of his/her partner(s) is called a: A Split-Dollar Plan B Entity Purchase Plan C Cross Purchase Plan D Deferred Compensation
c