Primerica - UCANPASS - Chapter Taxes,
Retirement and Other Insurance Concepts
UPDATED ACTUAL Exam Questions and
CORRECT Answers
Which of the following is NOT true life settlements?
A: They could be sold for an amount greater than the cash value
B: They involve insurance policies with large face amounts
C: The seller must be terminally ill
D: They could be used for a key person coverage - CORRECT ANSWER - C: The seller
must be terminally ill
With Life Settlements, unlike with viatical settlements, the seller does not need to be terminally
ill. They usually involve life insurance policies with a face amount of $250,000 or more, "key-
person" coverage, corporate owned policies, or policies representing excess coverage that is no
longer needed, and could be sold for an amount greater than the current cash value.
An Internal Revenue Code provision that specifically provides for an individual retirement plan
for public school teachers is a(n)
A: Keogh Plan
B: Roth IRA
C: SEP
D: 403(b) Plan (TSA) - CORRECT ANSWER - D: 403(b) Plan (TSA)
Under a 403(b) Plan, tax-sheltered annuities may be established for the employees of specified
nonprofit charitable, educational, religious and other 501c(3) organizations, including teachers in
public schools systems. Such plans generally are not available to other kinds of employees.
Which of the following describes the tax advantage of the qualified retirement plan?
A: Employer contributions are not taxed when paid out to the employee
, B: The earnings in the plan accumulate tax deferred
C: Distributions prior to age 59 1/2 are tax deductible
Employee contributions are deductible as a business expense when the employee receives
benefits - CORRECT ANSWER - B: The earnings in the plan accumulate tax deferred
Contributions are tax deferred, and earnings on the money in the plan accrue on a tax-deferred
basis.
All of the following are examples of third-party ownership of a life insurance policy EXCEPT
A: When an insured purchased a new home, the insured made an absolute assignment of a life
insurance policy to the mortgage company
B: An insured borrows money from the bank and makes a collateral assignment of a part of the
death benefit to secure the loan
C: An insured couple purchased a life insurance policy insuring the life of their grandson
D: A company purchases a life insurance policy on their manager, who is an important part of
the operation - CORRECT ANSWER - B: An insured borrows money from the bank and
makes a collateral assignment of a part of the death benefit to secure the loan
A collateral assignment is the transfer of some or all of the death benefits of the policy to a
creditor as security for a loan, but does not give the creditor the rights of ownership. In the event
of the insured's death, the creditor would only be able to recover that portion of the policy's
proceeds equal to the creditor's remaining interest in the loan.
An employee is insured under her employer's group life plan. If she terminated her group
coverage, which of the following statements is INCORRECT?
A: The insured would not need to prove insurability for a conversion policy
B: The insured may convert coverage to an individual policy within 31 days
C: The premium for individual coverage will be based upon the insured's attained age
D: The insured may choose to convert to term or permanent individual coverage - CORRECT
ANSWER - D: The insured may choose to convert to term or permanent individual
coverage
Retirement and Other Insurance Concepts
UPDATED ACTUAL Exam Questions and
CORRECT Answers
Which of the following is NOT true life settlements?
A: They could be sold for an amount greater than the cash value
B: They involve insurance policies with large face amounts
C: The seller must be terminally ill
D: They could be used for a key person coverage - CORRECT ANSWER - C: The seller
must be terminally ill
With Life Settlements, unlike with viatical settlements, the seller does not need to be terminally
ill. They usually involve life insurance policies with a face amount of $250,000 or more, "key-
person" coverage, corporate owned policies, or policies representing excess coverage that is no
longer needed, and could be sold for an amount greater than the current cash value.
An Internal Revenue Code provision that specifically provides for an individual retirement plan
for public school teachers is a(n)
A: Keogh Plan
B: Roth IRA
C: SEP
D: 403(b) Plan (TSA) - CORRECT ANSWER - D: 403(b) Plan (TSA)
Under a 403(b) Plan, tax-sheltered annuities may be established for the employees of specified
nonprofit charitable, educational, religious and other 501c(3) organizations, including teachers in
public schools systems. Such plans generally are not available to other kinds of employees.
Which of the following describes the tax advantage of the qualified retirement plan?
A: Employer contributions are not taxed when paid out to the employee
, B: The earnings in the plan accumulate tax deferred
C: Distributions prior to age 59 1/2 are tax deductible
Employee contributions are deductible as a business expense when the employee receives
benefits - CORRECT ANSWER - B: The earnings in the plan accumulate tax deferred
Contributions are tax deferred, and earnings on the money in the plan accrue on a tax-deferred
basis.
All of the following are examples of third-party ownership of a life insurance policy EXCEPT
A: When an insured purchased a new home, the insured made an absolute assignment of a life
insurance policy to the mortgage company
B: An insured borrows money from the bank and makes a collateral assignment of a part of the
death benefit to secure the loan
C: An insured couple purchased a life insurance policy insuring the life of their grandson
D: A company purchases a life insurance policy on their manager, who is an important part of
the operation - CORRECT ANSWER - B: An insured borrows money from the bank and
makes a collateral assignment of a part of the death benefit to secure the loan
A collateral assignment is the transfer of some or all of the death benefits of the policy to a
creditor as security for a loan, but does not give the creditor the rights of ownership. In the event
of the insured's death, the creditor would only be able to recover that portion of the policy's
proceeds equal to the creditor's remaining interest in the loan.
An employee is insured under her employer's group life plan. If she terminated her group
coverage, which of the following statements is INCORRECT?
A: The insured would not need to prove insurability for a conversion policy
B: The insured may convert coverage to an individual policy within 31 days
C: The premium for individual coverage will be based upon the insured's attained age
D: The insured may choose to convert to term or permanent individual coverage - CORRECT
ANSWER - D: The insured may choose to convert to term or permanent individual
coverage
