Taxes, Retirement, and other Insurance Concepts
If $100,000 of life insurance proceeds were used in a settlement option, which paid $13,000 per year for ten years, which of the following would be taxable annually?
$3,000
what percentage of a company's employees must take part in the noncontributory group life plan?
100%
In order to qualify for conversion from a group life policy that has been terminated to an individual policy of the same coverage, a person must have been insured under the group plan for how many years?
5
The minimum number of credits required for partial insured status for Social Security disability benefits is
6 credits
which of the following is the required number of participants in a contributory group plan?
75%
what is the official name for Social Security Program?
Old Age Survivors Disability Insurance
Social Security was created to provide all of the following benefits EXCEPT
Unemployment income
The president of a manufacturing company has offered one of the company's officers a special individual annuity plan that is unaavailble to lower echelon employees. this plan would be funded with before tax corporate dollars, and it does not meet government approval standards. This annuity plan is subject to:
a nonqualified annuity plan.
An individual has been diagnosed with Alzheimer's disease. he is insured under a life insurance policy with the accelerated benefits rider. which one of the following is true regarding taxation of the accelerated benefits?
a portion of the benefit up to a limit is tax free; the rest is taxable income.
what does "Liquidity" refer to in a life insurance policy?
cash values can be borrowed at any time
when an employee terminates coverage under a group insurance policy, coverage continues in force.
for 31 days
which of the following is TRUE of a qualified plan?
it has a tax benefit for both employer and employee
An employee is joining a group insurance plan. In order to avoid having to prove insurability, what must the employee do?
join during the open enrollment period
which of the following is NOT true regarding policy loans?
money borrowed from the cash value is taxable
Traditional IRA contributions are tax deductible based on which of the following?
owners income
which of the following is correct concerning the taxation of premiums in a key-person life insurance policy?
premiums are not tax deductible as a business expense
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.
A corporations 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 statements concerning an employer sponsored non qualified retirement plan are true EXCEPT
the employer can receive a current tax deduction for any contributions made to the plan.
An employee is insured under her employers group life plan. if she terminates her group coverage, which of the following statements is INCORRECT?
the insured may choose to convert to term or permanent individual coverage.
An employee quits his job on May 15 and doesn't convert his Group Life policy to an individual policy for 2 weeks. He dies in a freak accident on June 1. Which of the following statements best describes what will happen?
the insurer will pay the full death benefit from the group policy to the beneficiary
In a life settlement contract, whom does the life settlement broker represent?
the owner
All of the following would be eligible to establish a Keogh retirement plan EXCEPT
the president and employee of a family corporation.
which of the following is NOT true of life settlements?
the seller must be terminally ill
how are contributions to a tax-sheltered annuity treated with regards to taxation?
they are not included as income for the employee, but are taxable upon distribution
An insured under a life insurance policy has been diagnosed with a terminal illness and has 6 months to live. The insured knows that his financial state will worsen even more with the upcoming medical expenses. What option could the insured utilize?
viatical settlement