8 - Other Life Topics 1

Question 1

Group members may convert to a new individual plan (based on the age, amount and form of coverage requested) within ________

Answer 1

-31 days

Question 2

Group members may convert to a new individual plan if:

Answer 2

• member voluntarily leaves the group
• group is disbanded
• the insurer or fiduciary does not renew the group plan

Question 3

_____________ of nonrenewal must be provided by the fiduciary to the member(s).

Answer 3

-45 days notice

Question 4

If the member (employee or other covered persons) dies during the 31-day conversion election period, the beneficiary ________.

Answer 4

-receives the death benefit

Question 5

North Carolina statutes allow group plans to be either:

Answer 5

• Contributory

- Non-Contributory

Question 6

Contributory

Answer 6

• employer and employee share premiums

- require 75% of eligible employees to participate

Question 7

Non-Contributory

Answer 7

• employer pays the entire premium

- require 100% participation

Question 8

Premiums paid by an employer for an employee are NOT taxable to the employee on the premiums for up to a _______ death benefit.

Answer 8

-$50,000

Question 9

The premiums paid by the employer on amounts above ______ require the employer to add the premium as income to the employee W-2.

Answer 9

-$50,000

Question 10

Group plan contracts are generally written as ____________.

Answer 10

-group renewable annual term insurance

Question 11

Group plan premiums are based on _________.

Answer 11

-ages and genders of the group at renewal

Question 12

Although employee group plans are the most common, other group life insurance plans include the following:

Answer 12

• Credit Life
• Mortgage Life
• Credit Life and Mortgage Life

Question 13

Credit Life is _________ insurance that covers the lives of debtors who have outstanding loans with a specified creditor.

Answer 13

-decreasing term life

Question 14

Mortgage Life

is ________ insurance coverage that is designed to pay a debtor’s remaining mortgage balance if he or she dies.

Answer 14

-decreasing term life

Question 15

____________ policies are purchased to relieve the surviving family or estate of a deceased insured of any responsibility of the debt.

Answer 15

-Credit Life and Mortgage Life

Question 16

IRA

Answer 16

-Individual Retirement Accounts

Question 17

Maximum amount of contribution towards an IRA is _______ for persons under 50 and _____ for persons age 50 and older

Answer 17

• $5,500

- $6,500

Question 18

Taxes will not be due until _______ for IRAs

Answer 18

-withdrawal

Question 19

Withdrawals from IRAs before age ____ will have a ____ tax penalty as well as the ordinary income taxes due on the amount withdrawn.

Answer 19

• 59 1/2

- 10%

Question 20

Withdrawals from an IRA must begin by age ____ or penalties will be applied.

Answer 20

70 1/2

Question 21

IRA investments may be in variable or fixed annuities but not in _________.

Answer 21

-life insurance policies

Question 22

The Roth Individual Retirement Account (IRA) allows individuals the opportunity to set-up retirement accounts using ________

Answer 22

-after-tax dollars

Question 23

Roth IRA rules dictate that as long as the account has been held for ______ and the owner is age _____ or older, he or she can withdraw from the account and won’t owe any federal taxes.

Answer 23

• 5 years

- 59 1/2

Question 24

One other important feature of the Roth Individual Retirement Account, different from the Traditional IRA, is there are no ________ that must begin at a specified age.

Answer 24

-forced withdrawals

Question 25

______ and ______ allow any qualified retirement plan deposits to move from one account to another account without taxation.

Answer 25

- Rollovers | - Transfers

Question 26

In a ________ the plan disburses the money from the account directly to the account depositor. The depositor has taken __________ of the funds.

Answer 26

- Rollover | - "Constructive Receipt"

Question 27

In a "rollover " the original amount disbursed must be deposited into the new account within _____ to avoid taxes and penalties.

Answer 27

-60 days

Question 28

In a _______ the plan disburses the money directly to the new account. With this method, the depositor never took control of the money being disbursed.

Answer 28

-"transfer"

Question 29

Tax-Sheltered Annuities are also know by...

Answer 29

-IRS code number 403-b

Question 30

Tax-Sheltered Annuities are available to employees of:

Answer 30

- Nonprofit charitable organizations | - educational, religious and other organizations approved by the IRS

Question 31

The IRS has an early withdrawal penalty of ___ before age _____ for Tax-Sheltered Annuities

Answer 31

- 10% | - 59 1/2

Question 32

Keogh Plans are also known as...

Answer 32

-HR-10 Plans

Question 33

Keogh plans allow self-employed individuals to fund their retirement with _____ dollars similar to corporate pension plans. Contributions are limited to ____ of self-employed earned income up to an annual maximum.

Answer 33

- pre-tax | - 100%

Question 34

Keogh Plan eligible employees must be:

Answer 34

- at least 21 years of age - worked for employer for at least 1 year - work at least 1,000 hours per year

Question 35

SEP

Answer 35

-Simplified Employee Pension

Question 36

A ____________ plan provides business owners with a method to contribute toward their own retirement savings. Contributions are made to an Individual Retirement Account (IRA) set up for each plan participant.

Answer 36

-Simplified Employee Pension

Question 37

If the employer has employees he or she is required to set-up a SEP for all employees who meet the following qualifications:

Answer 37

- 21 or older - worked for the employer for at least 3 of the previous 5 years - have received at least $600 in compensation

Question 38

The maximum allowable contributions to an employee SEP is the lesser of _____ of annual compensation or _____ for 2018 and is subject to annual cost-of-living adjustments for later years.

Answer 38

- 25% | - $55,000

Question 39

A 401K is a qualified plan established by employers to which eligible employees may make salary deferral contributions on ___________ basis

Answer 39

-post-tax and/or pre-tax

Question 40

Two types of Buy-Sell Agreements:

Answer 40

- The Cross-purchase plan | - The Entity Plan

Question 41

________ allows each person involved in the Buy-Sell Agreement to purchase life insurance on the other individuals with a death benefit equal to each person’s share of the buy-out.

Answer 41

-Cross-purchase Plan

Question 42

________ allows the business to purchases policies on the individuals in the Buy-Sell Agreement.

Answer 42

-Entity Plan

Question 43

The official name of the Social Security Program is...

Answer 43

-Old Age, Survivors and Disability Insurance (OASDI)

Question 44

In order to receive Social Security Retirement Benefits, a person must be _______.

Answer 44

-"fully insured"

Question 45

Fully Insured is defined as a person who has ______ of Social Security covered work in their lifetime

Answer 45

-40 quarters (10 years)

Question 46

Social Security Retirement Benefits can be paid beginning at age _____.

Answer 46

-62

Question 47

If an individual begins Social Security retirement at age _____, the retirement benefit will be a reduced amount. The reduction currently is ______ of the recipient’s normal retirement amount.

Answer 47

- 62 | - 20% - 30%

Question 48

The Internal Revenue Service (IRS) allows employees of some charities to set-up a qualified retirement plan using a Tax Sheltered Annuity (TSA). This Annuity plan has the IRS Code of:

Answer 48

-403-B

Question 49

Mortgage Life is what type of Life Insurance?

Answer 49

-Decreasing Term

Question 50

Which Buy and Sell Agreement requires the partners in the business to purchase and pay for the life policies?

Answer 50

-Cross-purchase Plan

Question 51

The 403-b will have a ________ tax penalty if withdrawals are made prior to age 59½.

Answer 51

-10%

Question 52

The earliest age that a person may receive his or her Social Security retirement benefits is age ______.

Answer 52

-62

Question 53

S, D and P are in business together. The three equal partners decide to enter into a Buy and Sell Agreement that will be funded by life insurance. If the partners use a Cross Purchase Buy and Sell Agreement, how many life insurance policies will be needed?

Answer 53

-6

Question 54

Credit Life is what type of Life Insurance?

Answer 54

-Decreasing Term

Question 55

Social Security (OASDI) can provide a benefit to the surviving spouse of a deceased worker. The period of time that the spouse will NOT receive benefits before eligibility for retirement benefits is called:

Answer 55

-the "black-out" period

Question 56

Group Life insurance is which of the following types of life insurance?

Answer 56

Level Term

Question 57

D, age 55, withdrew $2,500 from her Individual Retirement Account (IRA) which consists entirely of pre-tax contributions. In addition to including that amount in her taxable income, she has to pay a penalty of;

Answer 57

-$250

Question 58

Employer group life insurance plans in which employees pay part of the premiums are referred to as:

Answer 58

-contributory plans

Question 59

Q, C and E are in business together. The three equal partners decide to enter into a Buy and Sell Agreement that will be funded by life insurance. If the partners use an Entity Plan Buy and Sell Agreement how many life insurance policies will be needed?

Answer 59

-3