Life Exam Questions with Correct
Solutions (Verified Answers)2025/26
GRADED A.
If the beneficiary of a life insurance policy receives death benefit payments that consist
of principal and interest , which portion , if any , will be taxed ? - Correct
answerIntrest only
who owns a group life insurance contract? - Correct answerthe employer
what are the consequences of withdrawing funds from a traditional IRA prior to the age
of 59 1/2? - Correct answer10% penalty
what is the primary purpose of a 401(k) plan? - Correct answerProvide
retirement income
Life insurance may be used to pay state inheritance, taxes, and federal estate taxes
eliminating the need to sell assets from the estate. What is this called? - Correct
answerEstate conservation
what is the name of an overfunded life insurance policy? - Correct answerA
modified endowment contract (MEC)
what are the personal uses of life insurance? - Correct answerSurvivor,
protection, estate, creation, and conservation, cash, accumulation, and liquidity
Who would be considered a third-party owner? - Correct answerAn individual
or an entity, who is not the insured
If a retirement plan is qualified what does that mean? - Correct answerThe
plan has a favorable tax treatment
What is the penalty for excessive contributions to a traditional IRA? - Correct
answer6%
, what are the three types of Social Security benefits? - Correct
answerRetirement, disability, and survivors
In what form of payment must the contributions to a traditional IRA be made? -
Correct answerin cash or cash equivalents
SIMPLE plans are available to groups of how many employees - Correct
answerNo more than 100
what is the general taxation rule for death benefits payable to the beneficiary of a life
insurance policy? - Correct answerDeath benefits are generally not subject to
income taxes
is the death benefit of a life insurance policy tax to the beneficiary if it's received as a
lump sum? - Correct answerNo lump sum benefits are received tax-free
and qualified plans are employer contributions tax as income to the employees -
Correct answerNo employer contributions are not taxed as income to the
employees
what does liquidity mean in a life insurance policy? - Correct answerAvailability
of cash value
According to the taxation rules of life insurance policies, how are cash value increased
taxes? - Correct answerCash value growth this tax deferred
for a retirement plan to be qualified, it must be designed for whose benefit - Correct
answerEmployees
What qualified plan is suitable for the self-employed? - Correct answerHR - 10
or keogh
Who may contribute to an HR - 10 plan - Correct answerA self-employed
individual
upon surrender of a life insurance policy, what portion of the cash value will be taxed? -
Correct answeronly the portion in excess of the premium paid
Solutions (Verified Answers)2025/26
GRADED A.
If the beneficiary of a life insurance policy receives death benefit payments that consist
of principal and interest , which portion , if any , will be taxed ? - Correct
answerIntrest only
who owns a group life insurance contract? - Correct answerthe employer
what are the consequences of withdrawing funds from a traditional IRA prior to the age
of 59 1/2? - Correct answer10% penalty
what is the primary purpose of a 401(k) plan? - Correct answerProvide
retirement income
Life insurance may be used to pay state inheritance, taxes, and federal estate taxes
eliminating the need to sell assets from the estate. What is this called? - Correct
answerEstate conservation
what is the name of an overfunded life insurance policy? - Correct answerA
modified endowment contract (MEC)
what are the personal uses of life insurance? - Correct answerSurvivor,
protection, estate, creation, and conservation, cash, accumulation, and liquidity
Who would be considered a third-party owner? - Correct answerAn individual
or an entity, who is not the insured
If a retirement plan is qualified what does that mean? - Correct answerThe
plan has a favorable tax treatment
What is the penalty for excessive contributions to a traditional IRA? - Correct
answer6%
, what are the three types of Social Security benefits? - Correct
answerRetirement, disability, and survivors
In what form of payment must the contributions to a traditional IRA be made? -
Correct answerin cash or cash equivalents
SIMPLE plans are available to groups of how many employees - Correct
answerNo more than 100
what is the general taxation rule for death benefits payable to the beneficiary of a life
insurance policy? - Correct answerDeath benefits are generally not subject to
income taxes
is the death benefit of a life insurance policy tax to the beneficiary if it's received as a
lump sum? - Correct answerNo lump sum benefits are received tax-free
and qualified plans are employer contributions tax as income to the employees -
Correct answerNo employer contributions are not taxed as income to the
employees
what does liquidity mean in a life insurance policy? - Correct answerAvailability
of cash value
According to the taxation rules of life insurance policies, how are cash value increased
taxes? - Correct answerCash value growth this tax deferred
for a retirement plan to be qualified, it must be designed for whose benefit - Correct
answerEmployees
What qualified plan is suitable for the self-employed? - Correct answerHR - 10
or keogh
Who may contribute to an HR - 10 plan - Correct answerA self-employed
individual
upon surrender of a life insurance policy, what portion of the cash value will be taxed? -
Correct answeronly the portion in excess of the premium paid
