Chapter 4 Flashcards
Retirement and other Insurance Concepts (15 cards)
Generally, the premium paid for personal life insurance is
A. Fully tax deductible
B. Partially tax deductible
C. Not tax deductible
D. Taxed
C. Not tax deductible
Page 95
Which of the following is NOT true regarding policy loans?
A. Money borrowed from the cash value is taxable
B. Policy loans can be repaid at death
C. An insurer can charge interest on outstanding policy loans
D. A policy loan may be repaid after the policy is surrendered
A. Money borrowed from the cash value is taxable
Page 89
Which of the following is NOT a requirement of a qualified plan?
A. It must be temporary
B. It must have a vesting schedule
C. It cannot discriminate in favor of highly paid employees
D. It must be written and communicated to all participants
A. It must be temporary
Page 82
If a life policy does not pass the 7-pay test, that policy
A. Must be canceled
B. Becomes a Modified Endowed Contract
C. Is considered a limited-pay policy
D. Must increase its premiums for additional 7 years
B. Becomes a Modified Endowed Contract
Page 91
The 10% early withdrawal penalty from an IRA can be waived for
A. Any type of disability
B. Catastrophic medical expenses
C. Withdrawals at age 55
D. A down payment under $10,000 on a second home
B. Catastrophic medical expenses
Page 84
The number of credits required to obtain a fully insured status to receive Social Security benefits is
A. 6
B. 10
C. 13
D. 40
D. 40
Page 92
Which of the following is the eligibility requirement for setting up a traditional IRA plan?
A. Minimum age
B. Earned Income
C. Tax Bracket
D. Type of Employment
B. Earned Income
Page 83
What is the requirement for a number of employees in a SIMPLE plan?
A. 100 or more
B. 50 or fewer employees
C. No more than 100
D. At least 50
C. No more than 100
Page 85
The advantage of qualified plans to employers is
A. Tax-Deductible contributions
B. Tax-free Earnings
C. No lump-sum payments
D. Taxable Contriubutions
A. Tax-Deductible contributions
Page 82
With personal life insurance, the lump-sum death benefit is received by the beneficiary
A. Income tax-free
B. On a last-in-first-out basis
C. As taxable income
D. With taxable interest
A. Income tax-free
Page 90
In group life policies, individual certificates are given to
A. The policyholder to keep on file
B. Each insured person
C. The group sponsor
D. The insurance producer
B. Each insured person
Page 81
Which of the following insurance arrangements will be appropriate for a business purchasing life insurance on its general manager?
A. A buy-sell agreement
B. An irrevocable beneficiary
C. Third-party ownership
D. A Modified Endowment Contract
C. Third-party ownership
Page 87
Which of the following are Social Security benefits?
A. Workers compensation and unemployment
B. Accidental death and dismemberment
C. Retirement, disability and survivors
D. Accelerated Death Benefit
C. Retirement, disability and survivors
Page 96
A key-person insurance policy benefit will pay for which of the following?
A. Loss of personal income
B. Workers Compensation
C. Hospital bills of the key employee
D. Cost of training a replacement
D. Cost of training a replacement
Page 87
An employee quits his job and converts his group insurance to an individual policy. On which of the following will the premium for the individual policy be based?
A. Experience rating
B. Original group rate
C. Insured’s income
D. Insured’s attained age
D. Insured’s attained age
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