Missed Exam Q’s
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?
$10,000, no tax consequence [During an IRA direct transfer (or direct rollover), the full amount gets reinvested from one plan to the other
What is the maximum penalty for habitual willful noncompliance with the Fair Credit Reporting Act?
$2,500
A policyowner cancels his life policy but instructs the insurance company to transfer the cash value of his policy to an annuity. This nontaxable transaction is called
1035 exchange (In accordance with Section 1035 of the Internal Revenue Code, certain exchanges of life insurance policies and annuities may occur as nontaxable exchanges.)
To be eligible under HIPAA regulations, for how long should an individual converting to an individual health plan have been covered under the previous group plan?
18 months
An insurance company must notify the Commissioner whenever it terminates an agent's appointment within how many days of the termination?
30 days
If a company has a Simplified Employee Pension plan, what type of plan is it?
A qualified plan for a small business [A Simplified Employee Pension (SEP) is a type of qualified plan suited for the small employer or for self-employed. A SEP is an employer-sponsored IRA with an expanded contribution rate up to 25% of compensation or a specified maximum contribution amount.]
Under which condition would an employee's group medical benefits be exempt from income taxes?
An employee's group medical benefits are generally exempt from taxation of income
Under the 401(k) bonus or thrift plan, the employer will contribute
An undetermined percentage for each dollar contributed by the employee
Under the Age Discrimination in Employment Act, retiree health benefits offered to employees under the age of 65 must value
At least the same benefit amount offered by Social Security.
When an insurer offers services like preadmission testing, second opinions regarding surgery, and preventative care, which term would best apply?
Case management provision
Which type of dental treatment involves the dental pulp within the teeth?
Endodontics
An annuity owner is funding an annuity that will supplement her retirement. Because she does not know what effect inflation may have on her retirement dollars, she would like a return that will equal the performance of the Standard and Poor's 500 Index. She would likely purchase a(n)
Equity Indexed Annuity
An association could buy group insurance for its members if it meets all of the following requirements
Holds annual meetings Its contributory Has at least 100 members Has a constitution and by-laws
What is the main purpose of the Seven-pay Test?
It determines if the insurance policy is an MEC (Modified Endowment Contract).
A couple receives a set amount of income from their annuity. When the wife dies, the husband no longer receives annuity payments. What type of annuity did the couple buy?
Joint life (Joint life annuity settlement option pays benefits to two or more annuitants, but stops upon the death of the first)
Which type of Medicare policy requires insureds to use specific healthcare providers and hospitals (network providers), EXCEPT in emergency situations?
Medicare SELECT
an agent misrepresents the details of an insured's new insurance contract that will be replacing the current contract. which of the following will most likely happen?
Suspension of license
All of the following would be different between qualified and non qualified retirement plans EXCEPT a) Taxation of withdrawals b) Taxation of contributions c) IRS approval requirements d) Taxation on accumulation
Taxation on accumulation (Taxation on accumulation is deferred in both types of plans. The rest would differ)
Which of the following is NOT covered under Plan A in Medigap insurance?
The Medicare Part A deductible. (Medicare Supplement Plan A provides the core, or basic, benefits established by law)
A 60 year-old participant in a 401(k) plan takes a distribution and rolls it over to an IRA within 60 days. Which of the following is true?
The amount of the distribution is reduced by the amount of a 20% withholding tax
Twins brother and sister each purchased a retirement annuity. When they retired at the same time, each selected the life income option. Both have similar life styles and are in good health. Which of the following is true with respect to their monthly annuity payments?
The man's payments will be larger
Which of the following is true regarding MET's (Multiple Employer Trust)?
They allow several small employers purchase less expensive insurance together.
Which of the following policies would have an IRS required corridor or gap between the cash value and the death benefit?
Universal Life-Option A (Level Death Benefit option)
All of the following are TRUE statements regarding the accumulation at interest option EXCEPT a) The policyholder has the right to withdraw the accumulations at any time. b)The interest is not taxable since it remains inside the insurance policy. c)The annual dividend is retained by the company. d)The interest is credited at a rate specified by the policy.
b) The interest is not taxable since it remains inside the insurance policy [The interest credited under this option is TAXABLE, whether or not the policyowner receives it]
Which of the following will NOT be an appropriate use of deferred annuity? a) Accumulating retirement funds b) Accumulating funds in an IRA c) Funding a child's college education d) Creating an estate
d) Creating an estate [Deferred annuities grow tax deferred, and are best suitable for accumulating retirement income or funds for children's college education. Unlike life insurance, annuities do not create an estate, but liquidate it.]