CH4 VA State and Health. Exam Questions with accurate answers. Rated A

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CH4 VA State and Health. Exam Questions with accurate answers. Rated A Carol is insured under her employer's group life insurance plan at her place of employment. All of the following statements ... about her coverage are true EXCEPT A) If carol quits, she may within 31 days, request that her coverage be converted to an individual policy. B) Should Carol convert her coverage, the premium will be based upon her attained age. C) Carol could should what type of insurance her conversion policy provided (Term or Permanent). D) Carol would not need to prove insurability for a conversion policy. - ✔✔C) Carol could should what type of insurance her conversion policy provided (Term or Permanent). Which of the following is the required number of participants in a contributory group plan? A) 25% B) 50% C) 75% D) 100% - ✔✔C) 75% Group life insurance is a single policy written to provide coverage to members of a group. Which of the following statements concerning group life is CORRECT? A) Each member covered receives a policy B) Coverage cannot be converted when an individual leaves the group C) Premiums are determined by age, occupation, and individual underwriting. D) 100% participation of members is required in noncontributory plans - ✔✔D) 100% participation of members is required in noncontributory plans In order to qualify for conversion from a group life policy to an individual policy of the same coverage, a person must have been insured under the group plan for how many years? A) 1 B) 3 C) 5 D) 10 - ✔✔C) 5 Which of the following employees insured under a group life plan would be allowed to convert to individual insurance of the same coverage once the plan is terminated? A) Those who have been insured under the plan for at least 5 years B) Those who have worked in the company for at least 3 years C) Those who have dependents D) Those who have no history of claims - ✔✔A) Those who have been insured under the plan for at least 5 years --QUALIFIED-- -Contributions currently TAX DEDUCTIBLE - Plan APPROVED by the IRS - Plan CANNOT DISCRIMINATE - Earnings grow TAX DEFERRED - ALL WITHDRAWALS are TAXED - ✔✔--NON-QUALIFIED-- - Contributions NOT currently TAX DEDUCTIBLE - Plan DOES NOT NEED IRS APPROVAL - Plan CAN DISCRIMINATE - Earnings grow TAX DEFERRED - EXCESS over cost basis is TAXED Which of the following is true of a qualified plan? A) It does not need to have a vesting schedule? B) It may discriminate in favor of highly paid employees. C) It may allow unlimited contributions. D) It has a tax benefit for both employer and empoloyee - ✔✔D) It has a tax benefit for both employer and empoloyee For an individual who is NOT covered by an employer-sponsored plan, IRA contributions A) Will be tax deductible. B) Will be deducted based on the income level. C) Are never tax deductible. D) Are partially tax deductible depending on the income level. - ✔✔A) Will be tax deductible. Which type of retirement account allows contributions to continue beyond age 70.5 and does not force distributions to start at age 70.5? A) Flexible IRA B) Standard IRA C) Traditional IRA D) Roth IRA - ✔✔D) Roth IRA Which of the following would be considered a nonqualified retirement plan? A) Roth IRA B) Split-dollar plan C) 401(k) D) Keogh plan - ✔✔B) Split-dollar plan Employer contributions made to a qualified plan A) Have no vesting requirement B) Are taxable as salary C) Are subject to vesting requirements. D) Are taxable - ✔✔C) Are subject to vesting requirements. An individual has been contributing to a retirement account after taxes are taken out of his paycheck. His financial adviser told him that he will be allowed to make contributions after age 70.5. The account owner does not have to pay taxes on the growth of his account. What type of retirement account is it? A) Traditional IRA B) Roth IRA C) 403(b) D) Simplified Employee Pension Plan - ✔✔B) Roth IRA Who is a third-party owner? A) A policyowner who is not the insured. B) An insurer who issues a policy for two people C) An employee in a group policy D) An irrevocable beneficiary - ✔✔A) A policyowner who is not the insured. Which of the following insurance arrangements will be appropriate for a parent buying a life insurance policy on a child where the parent is the policyowner? A) Family term rider B) Third-party ownership C) An irrevocable beneficiary D) A buy-sell agreement - ✔✔B) Third-party ownership All of the following are examples of third-party ownership of a life insurance policy EXCEPT A) An insured borrows money from the bank and makes a collateral assignment of a part of the death benefit to secure the loan. B) An insured couple purchases a life insurance policy insuring the life of their grandson C) A company purchases a life insurance policy on their manager, who is an important part of the operation. D) When an insured purchased a new home, the insured made an absolute assignment of a life insurance policy to the mortgage company. - ✔✔A) An insured borrows money from the bank and makes a collateral assignment of a part of the death benefit to secure the loan. What type of life insurance is most commonly used for group plans? A) Annually renewable term B) Whole life C) Flexible premium whole life D) Decreasing term - ✔✔A) Annually renewable term If a retirement plan or annuity is "qualified", this means A) It is noncancellable B) It has a favorable tax treatment. C) It has a penalty for early withdrawal. D) It accepts after-tax contributions. - ✔✔B) It has a favorable tax treatment. All of the following statements concerning an employer sponsored nonqualified retirement plan are true EXCEPT A) The plan can discriminate as to who may participate. B) The plan is not approved for favorable tax treatment by the IRS. C) The employer can receive a current tax deduction for any contributions made to the plan. D) The plan is a legal method of accumulating money for retirement needs. - ✔✔C) The employer can receive a current tax deduction for any contributions made to the plan. The president of a manufacturing company has offered one of the company's officers a special individual annuity plan that is unavailable to lower-echelon employees. This plan would be funded with before-tax corporate dollars, and it does not meet governmental approval standards. This annuity plan is A) Illegal B) A nonqualified annuity plan. C) An executive annuity plan D) Subject government standards - ✔✔B) A nonqualified annuity plan. For a retirement plan to be qualified, it must be designed for the benefit of A) Employees B) Key employee C) Employer D) IRS - ✔✔A) Employees An employee quits her job where she has a balance of $10,000 in her qualified plan. if she decides to do a direct transfer from her plan to a Traditional IRA, how much will be transferred from one plan e to terminally ill insured. Which of the following is INCORRECT regarding whole life insurance? A) Premiums are not tax deductible. B) Dividend interest is taxable. C) Policy loans are tax deductible. D) Cash value exceeding the premiums paid is taxable. - ✔✔C) Policy loans are tax deductible. In life insurance policies, cash value increases A) Are taxed annually B) Are only taxed when the owner reaches age [Show More]

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