Use of Life Insurance Chapter 8
In which business plan do the partners agree to buy the interest of the deceased
partner? - Answer Cross purchase
When using the needs approach for life insurance planning, lump sums may be created
for all of the following reasons EXCEPT - Answer Employee benefits
With three partners in a business, how many life insurance policies would be required to
insure a cross-purchase buy-sell plan? - Answer 6
Which of these is NOT considered to be a cost connected with an individual's death? -
Answer Business expenses
A partnership owns, pays for, and is the beneficiary of life insurance policies on the lives
of its individual partners. This is known as - Answer n entity buy-sell plan
Which of these is NOT a reason for purchasing life insurance on the life of a minor? -
Answer If both parents were to die, it would provide death benefits to the child
Robert and his employer agree on the purchase of a split-dollar life insurance policy and
the usual split-dollar approach to premium payments. Each year, the employer will
contribute to the premium an amount equal to - Answer the increase in the policy's cash
value
All of these are legitimate uses of insurance in a business setting EXCEPT - Answer
Funding against general company financial loss
A Split-dollar plan would most likely be had by a(n) - Answer division manager
Which of the following statements regarding key person insurance is NOT correct? -
Answer Premiums for a key person life insurance policy are a tax-deductible expense to
the business.
Which of the following examples pertaining to
Social Security benefits is CORRECT? - Answer Mason, who is married with one son,
age 16, is
a fully insured retired worker receiving Social Security benefits. In addition, his spouse
is eligible for benefits at age 62 and his son is eligible for benefits until he is 18 years
old.
All of the following statements correctly describe the purpose of Social Security
EXCEPT - Answer It provides a source of income for a meaningful standard of living
during retirement
When funds are transferred directly from one IRA to another IRA, what percentage of
the tax is withheld? - Answer None
, Use of Life Insurance Chapter 8
In an individual retirement account (IRA), rollover contributions are - Answer not limited
by dollar amount
Tom has a qualified retirement plan with his employer that is currently considered to be
80% "vested". How can this be interpreted? - Answer If Tom's employment is
terminated, 20% of the funds could be forfeited
Which tax would an IRA participant be subjected to on distributions received prior to age
59 1/2? - Answer Ordinary income tax and a 10% tax penalty for early withdrawal
Which plan is intended to be used by a sole proprietor and the employees of that
business? - Answer Keogh Plan
A life insurance producer's underwriting duties may include - Answer seeking additional
information requested by the insurance company
Which tax would an IRA participant be subjected to on distributions received prior to age
59 1/2? - Answer Income tax and penalty tax
HIPAA portability rules allow individuals who change from one group medical plan to
another to - Answer reduce or eliminate any pre-existing conditions excluded under the
new plan
Which of the following incidents would NOT be covered by an Accidental Death and
Dismemberment policy? - Answer Suicide
Trade association groups that are eligible for group medical benefits normally are -
Answer in the same industry
An insurance company can write an Accidental Death and Dismemberment policy as
a(n) - Answer stand-alone policy or rider
Which of the following is NOT a function of accident and health insurance? - Answer
Pays a death benefit as a result of natural causes
Which of the following statements BEST describes the HIPAA portability rules for an
individual who changes from one group medical plan to another? - Answer Reduces or
eliminates any pre-existing conditions excluded under the new plan
An employer provides a non-contributory disability income group plan to its employees.
How would a disability claim be treated for tax purposes? - Answer As taxable income
In regards to health insurance, employees age 65 or older are typically required to -
Answer be offered the same group health benefits offered to the younger employees
In which business plan do the partners agree to buy the interest of the deceased
partner? - Answer Cross purchase
When using the needs approach for life insurance planning, lump sums may be created
for all of the following reasons EXCEPT - Answer Employee benefits
With three partners in a business, how many life insurance policies would be required to
insure a cross-purchase buy-sell plan? - Answer 6
Which of these is NOT considered to be a cost connected with an individual's death? -
Answer Business expenses
A partnership owns, pays for, and is the beneficiary of life insurance policies on the lives
of its individual partners. This is known as - Answer n entity buy-sell plan
Which of these is NOT a reason for purchasing life insurance on the life of a minor? -
Answer If both parents were to die, it would provide death benefits to the child
Robert and his employer agree on the purchase of a split-dollar life insurance policy and
the usual split-dollar approach to premium payments. Each year, the employer will
contribute to the premium an amount equal to - Answer the increase in the policy's cash
value
All of these are legitimate uses of insurance in a business setting EXCEPT - Answer
Funding against general company financial loss
A Split-dollar plan would most likely be had by a(n) - Answer division manager
Which of the following statements regarding key person insurance is NOT correct? -
Answer Premiums for a key person life insurance policy are a tax-deductible expense to
the business.
Which of the following examples pertaining to
Social Security benefits is CORRECT? - Answer Mason, who is married with one son,
age 16, is
a fully insured retired worker receiving Social Security benefits. In addition, his spouse
is eligible for benefits at age 62 and his son is eligible for benefits until he is 18 years
old.
All of the following statements correctly describe the purpose of Social Security
EXCEPT - Answer It provides a source of income for a meaningful standard of living
during retirement
When funds are transferred directly from one IRA to another IRA, what percentage of
the tax is withheld? - Answer None
, Use of Life Insurance Chapter 8
In an individual retirement account (IRA), rollover contributions are - Answer not limited
by dollar amount
Tom has a qualified retirement plan with his employer that is currently considered to be
80% "vested". How can this be interpreted? - Answer If Tom's employment is
terminated, 20% of the funds could be forfeited
Which tax would an IRA participant be subjected to on distributions received prior to age
59 1/2? - Answer Ordinary income tax and a 10% tax penalty for early withdrawal
Which plan is intended to be used by a sole proprietor and the employees of that
business? - Answer Keogh Plan
A life insurance producer's underwriting duties may include - Answer seeking additional
information requested by the insurance company
Which tax would an IRA participant be subjected to on distributions received prior to age
59 1/2? - Answer Income tax and penalty tax
HIPAA portability rules allow individuals who change from one group medical plan to
another to - Answer reduce or eliminate any pre-existing conditions excluded under the
new plan
Which of the following incidents would NOT be covered by an Accidental Death and
Dismemberment policy? - Answer Suicide
Trade association groups that are eligible for group medical benefits normally are -
Answer in the same industry
An insurance company can write an Accidental Death and Dismemberment policy as
a(n) - Answer stand-alone policy or rider
Which of the following is NOT a function of accident and health insurance? - Answer
Pays a death benefit as a result of natural causes
Which of the following statements BEST describes the HIPAA portability rules for an
individual who changes from one group medical plan to another? - Answer Reduces or
eliminates any pre-existing conditions excluded under the new plan
An employer provides a non-contributory disability income group plan to its employees.
How would a disability claim be treated for tax purposes? - Answer As taxable income
In regards to health insurance, employees age 65 or older are typically required to -
Answer be offered the same group health benefits offered to the younger employees
