Taxes, Retirement, & Other Insurance Concepts

Front 1

In what form of payment must the contributions to a traditional IRA be made?

Back 1

In cash or cash equivalents

Front 2

Upon surrender of a life insurance policy, what portion of the cash value will be taxed?

Back 2

Only the portion in excess of the premium paid

Front 3

What are the personal uses of life insurance?

Back 3

Survivor protection, estate creation and conservation, cash accumulation and liquidity

Front 4

For a retirement plan to be qualified, it must be designed for whose benefit?

Back 4

Employees

Front 5

SIMPLE plans are available to groups of how many employees?

Back 5

No more than 100

Front 6

What are the three types of Social Security benefits?

Back 6

Retirement, disability and survivors

Front 7

If a retirement plan is qualified, what does that mean?

Back 7

The plan has favorable tax treatment.

Front 8

In qualified plans, are employer contributions taxed as income to the employees?

Back 8

No, employer contributions are not taxed as income to the employees

Front 9

What are the characteristics of the group that underwriters will consider before issuing a group life policy?

Back 9

Group’s purpose, size, financial strength and turnover

Front 10

What are the consequences of withdrawing funds from a traditional IRA prior to the age of 59 1/2?

Back 10

10% penalty

Front 11

Is the death benefit of a life insurance policy text to the beneficiary if it’s received in a lump sum?

Back 11

No, lump-sum benefits are received tax free

Front 12

When would life insurance policy proceeds be included in the insured’s taxable estate?

Back 12

When there is an incident of ownership at the time of death

Front 13

If an insured terminates membership in group life insurance, to what type of insurance can the insured convert the coverage?

Back 13

Whole life

Front 14

Who may contribute to an HR-10 plan

Back 14

A self-employed individual

Front 15

What is the general taxation rule for death benefits payable to the beneficiary of a life insurance policy?

Back 15

Death benefits are generally not subject to income taxes.

Front 16

If the beneficiary of a life insurance policy receives death benefits payments that consist of principal and interest, what portion, if any, will be taxed?

Back 16

Interest only

Front 17

Who qualifies for tax-sheltered annuities or 403(b) plans

Back 17

Employees of nonprofit organizations under section 501(3)(c) and employees of public school systems

Front 18

What is required to qualify an individual to contribute to a traditional IRA?

Back 18

Earned income

Front 19

Why are dividends in life insurance policies not taxable?

Back 19

Dividends are not considered income for tax purposes; they are a return of unused premium

Front 20

What are some examples of qualified plans?

Back 20

IRA, 401(k), HR10 (Keogh), SEP, SIMPLE

Front 21

Group life insurance policies are written as what type of insurance?

Back 21

Annually renewable term

Front 22

What qualified plan is suitable for the self-employed?

Back 22

HR-10 or Keogh

Front 23

When planning for survivor protection in life insurance, what needs to be considered?

Back 23

The insured’s current assets, liabilities, and survivor’s needs

Front 24

What is the main advantage of converting from group life insurance to individual coverage?

Back 24

Evidence of insurability is not required

Front 25

What is the main purpose of the 7-pay test?

Back 25

To determine if a life insurance policy is a modified endowment contract (MEC)

Front 26

Life insurance may be used to pay state inheritance tax and federal estate taxes eliminating the need to sell assets from the estate. what is this called?

Back 26

Estate conservation

Front 27

Who owns a group life insurance contract?

Back 27

The employer (also known as the sponsor of the group)

Front 28

What is the penalty for excessive contributions to a traditional IRA?

Back 28

6%

Front 29

What is the name for an overfunded life insurance policy?

Back 29

A modified endowment contract (MEC)

Front 30

Who would be considered a third-party owner?

Back 30

An individual or an entity who is not the insured

Front 31

What is the primary purpose of a 401(k) plan?

Back 31

Provide retirement income

Front 32

What type of policy is typically issued without proof of insurability from the insured?

Back 32

Group policy

Front 33

What type of policy issues certificates of insurance to the insureds?

Back 33

Group policy

Front 34

What does liquidity mean in a life insurance policy?

Back 34

Availability of cash value