CRPC random exam questions with
complete solutions5
In order to be considered a "qualified" policy, a long-term care policy must
A)include a determination of medical necessity by a physician.
B)be conditionally renewable
C)include a return of premium.
D)provide for nonforfeiture options. - ANSWERS-D)provide for nonforfeiture options.
To be classified as a qualified policy, cognitive impairment must be covered, it must provide for
nonforfeiture options, and it must be guaranteed renewable and conform to the National
Association of Insurance Commissioners Model Act. It cannot include a determination of
medical necessity by a physician nor can it include return of premium.
Which of the following are correct statements about the legal requirements for a loan to a
participant from a retirement plan?
The term of a loan for a medical emergency must not exceed five years.
Loans from SEP IRAs are not permitted.
The term of a loan used to acquire a principal residence may exceed five years.
Loans from a SIMPLE 401(k) plan are permitted.
A)I and IV
B)I, II, and III
C)I and II
D)I, II, III, and IV - ANSWERS-D)I, II, III, and IV
, All of the statements are true. The term of the loan must not exceed five years; however, loans
to acquire the participant's principal residence may be for a longer (unspecified) period. If a
loan requiring repayment within five years is not repaid in five years, it may be treated as a
distribution and taxed (and penalized) as such. Loans from IRAs, SEP IRAs, and SIMPLE IRAs are
not permitted under current tax law; however, loans from a qualified plan, including a SIMPLE
401(k) plan, are permitted.
Sequence of return risk is thought to have the most potential impact on an individual who has
A)just retired but has not yet begun distributions from his or her account.
B)been retired for 10-15 years.
C)just retired and begun distributions from his or her account.
D)10-15 years until retirement. - ANSWERS-C)just retired and begun distributions from his or
her account.
If portfolio withdrawals occur during a time when investments are producing a negative return,
the total value of the overall portfolio will be reduced at a faster rate than it would if returns
were more favorable. Essentially, a bear market or period of market losses can significantly
deplete the income-generating potential of a portfolio. This scenario is particularly detrimental
to a person who is transitioning into retirement, because the ability of the portfolio to "catch
up" during subsequent years is greatly diminished and the person's longevity risk will increase
significantly. In other words, the shares redeemed to provide income will not exist in the future.
Therefore, those shares cannot participate in any recovery and the newly retired person has a
bigger chance of running out of money before passing away. This risk is not as destructive
before retirement and if distributions are not being made.
A "rising equity glidepath" typically will lead to a(n) equity exposure over one's total lifetime.
A)increased in the early years and decreased in the later years
B)decreased
C)increased
D)consistent - ANSWERS-decreased
complete solutions5
In order to be considered a "qualified" policy, a long-term care policy must
A)include a determination of medical necessity by a physician.
B)be conditionally renewable
C)include a return of premium.
D)provide for nonforfeiture options. - ANSWERS-D)provide for nonforfeiture options.
To be classified as a qualified policy, cognitive impairment must be covered, it must provide for
nonforfeiture options, and it must be guaranteed renewable and conform to the National
Association of Insurance Commissioners Model Act. It cannot include a determination of
medical necessity by a physician nor can it include return of premium.
Which of the following are correct statements about the legal requirements for a loan to a
participant from a retirement plan?
The term of a loan for a medical emergency must not exceed five years.
Loans from SEP IRAs are not permitted.
The term of a loan used to acquire a principal residence may exceed five years.
Loans from a SIMPLE 401(k) plan are permitted.
A)I and IV
B)I, II, and III
C)I and II
D)I, II, III, and IV - ANSWERS-D)I, II, III, and IV
, All of the statements are true. The term of the loan must not exceed five years; however, loans
to acquire the participant's principal residence may be for a longer (unspecified) period. If a
loan requiring repayment within five years is not repaid in five years, it may be treated as a
distribution and taxed (and penalized) as such. Loans from IRAs, SEP IRAs, and SIMPLE IRAs are
not permitted under current tax law; however, loans from a qualified plan, including a SIMPLE
401(k) plan, are permitted.
Sequence of return risk is thought to have the most potential impact on an individual who has
A)just retired but has not yet begun distributions from his or her account.
B)been retired for 10-15 years.
C)just retired and begun distributions from his or her account.
D)10-15 years until retirement. - ANSWERS-C)just retired and begun distributions from his or
her account.
If portfolio withdrawals occur during a time when investments are producing a negative return,
the total value of the overall portfolio will be reduced at a faster rate than it would if returns
were more favorable. Essentially, a bear market or period of market losses can significantly
deplete the income-generating potential of a portfolio. This scenario is particularly detrimental
to a person who is transitioning into retirement, because the ability of the portfolio to "catch
up" during subsequent years is greatly diminished and the person's longevity risk will increase
significantly. In other words, the shares redeemed to provide income will not exist in the future.
Therefore, those shares cannot participate in any recovery and the newly retired person has a
bigger chance of running out of money before passing away. This risk is not as destructive
before retirement and if distributions are not being made.
A "rising equity glidepath" typically will lead to a(n) equity exposure over one's total lifetime.
A)increased in the early years and decreased in the later years
B)decreased
C)increased
D)consistent - ANSWERS-decreased
