Taxes, Retirement, and other Insurance Concepts QUIZ

Which of the following is NOT true regarding a nonqualified retirement plan?

It needs IRS approval

All of the following are characteristics of group life insurance EXCEPT

Premiums are determined by the age, sex and occupation of each individual certificate holder.

A key person insurance policy can pay for which of the following?

Costs of training a replacement

An insured decides to surrender his $100,000 Whole Life policy. The premiums paid into the policy added up to $15,000. At policy surrender, the cash surrender value was $18,000. What part of the surrender value would be income taxable?

$3,000

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

The premiums paid by the employer in a business life insurance policy are

Tax deductible by the employer

Who is a third-party owner?

A policyowner who is not the insured

Which of the following best defines the "owner" as it pertains to life settlement contracts?

The policy owner of the life insurance policy

Which of the following employees insured under a group life plan would be allowed to convert to individual insurance of the same coverage once the plan is terminated?

Those who have been insured under the plan for at least 5 years

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

All of the following are business uses of life insurance EXCEPT

funding against general company financial loss

An Internal Revenue Code provision that specifically provides for an individual retirement plan for public school teachers is a(n)

403(b) Plan (TSA)

Which of the following types of insurance policies would perform the function of cash accumulation?

whole life

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.

Which of the following terms means a result of calculation based on the average number of months the insured is projected to live due to medical history and mortality factors?

life expectancy