Taxation of Life Insurance and Annuities-Premiums and Proceeds

d.distributions are taxable

When contributions to an immediate annuity are made with before tax dollars which of the following is true of the distributions a.distributions are non taxable b.distributions cannot begin prior to age 72. c.there are no distributions d.distributions are taxable

b.tax deductible contributions

The advantage of qualified plans to employers is a.taxable contributions b.tax deductible contributions c.tax free earnings d.no lump sum payments

c.accumulated cash value

If an annuitant dies during the accumulation period what benefit(if any) will be included in the annuitants estate? a.no benefits b.policy loans c.accumulated cash value d.fully annuity benefit

b.taxes are deferred.

Which of the following best describes taxation during the accumulation period of an annuity? a.the growth is subject to immediate taxation. b.taxes are deferred. c.the annuity is subject to state taxes only. d.the annuity is subject to both state and federal taxation.

b.money borrowed from the cash value is taxable.

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 change interest on outstanding policy loans.

c.they are usually qualified plans.

Which of the following statements regarding deferred compensation funds is INCORRECT? a.they can be made with cash deposits to an annuity. b.they generally provide additional retirement benefits. c.they are usually qualified plans. d.they can be established by employers.

d.generally not taxed as income

life insurance death proceeds are a.taxable to the extent that they exceed 7.5% of the beneficiary's adjusted gross income. b.taxed as a capital gain c.taxed as ordinary income d.generally not taxed as income

d.50% tax on the amount not distributed as required.

An IRA uses immediate annuities to pay out benefits;the IRA owner is nearly 75 years old when he decides to collect distribution. What kind of penalty would the IRA owner pay? a.no penalties since the owner is older than 59 1/2 b.10% for early withdrawal c.15% for early withdrawal d.50% tax on the amount not distributed as required.

b.spouse

An applicant buys a non qualified annuity but dies before the starting date. For which of the following beneficiaries would the interest accumulated in the annuity NOT be taxable? a.annuitant b.spouse c.charitable organization d.dependents

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

If an insured surrenders his life insurance policy which statement is true regarding the cash value of the policy? a.it is taxable only if it exceeds the amounts paid for premiums by 50%. b.it is automatically taxable. c.it is only taxable if the cash value exceeds the amount paid for premiums. d.it is not considered to be taxable.

a.annuity payment

Which concept is associated with "exclusion ratio"? a.annuity payment b.dividend distributions c.how exclusion riders affect an insurance premium d.policy provisions

b.a whole life insurance policy is exchanged for a term insurance policy.

Which of the following is NOT an allowable 1035 exchange? a.a life insurance policy is exchanged for an annuity. b.a whole life insurance policy is exchanged for a term insurance policy. c.a whole life insurance policy is exchanged for a Universal life insurance policy. d.an annuity is exchanged for another annuity.