8 - Other Life Topics 1 Flashcards
Group members may convert to a new individual plan (based on the age, amount and form of coverage requested) within ________
-31 days
Group members may convert to a new individual plan if:
- member voluntarily leaves the group
- group is disbanded
- the insurer or fiduciary does not renew the group plan
_____________ of nonrenewal must be provided by the fiduciary to the member(s).
-45 days notice
If the member (employee or other covered persons) dies during the 31-day conversion election period, the beneficiary ________.
-receives the death benefit
North Carolina statutes allow group plans to be either:
- Contributory
- Non-Contributory
Contributory
- employer and employee share premiums
- require 75% of eligible employees to participate
Non-Contributory
- employer pays the entire premium
- require 100% participation
Premiums paid by an employer for an employee are NOT taxable to the employee on the premiums for up to a _______ death benefit.
-$50,000
The premiums paid by the employer on amounts above ______ require the employer to add the premium as income to the employee W-2.
-$50,000
Group plan contracts are generally written as ____________.
-group renewable annual term insurance
Group plan premiums are based on _________.
-ages and genders of the group at renewal
Although employee group plans are the most common, other group life insurance plans include the following:
- Credit Life
- Mortgage Life
- Credit Life and Mortgage Life
Credit Life is _________ insurance that covers the lives of debtors who have outstanding loans with a specified creditor.
-decreasing term life
Mortgage Life
is ________ insurance coverage that is designed to pay a debtor’s remaining mortgage balance if he or she dies.
-decreasing term life
____________ policies are purchased to relieve the surviving family or estate of a deceased insured of any responsibility of the debt.
-Credit Life and Mortgage Life
IRA
-Individual Retirement Accounts
Maximum amount of contribution towards an IRA is _______ for persons under 50 and _____ for persons age 50 and older
- $5,500
- $6,500
Taxes will not be due until _______ for IRAs
-withdrawal
Withdrawals from IRAs before age ____ will have a ____ tax penalty as well as the ordinary income taxes due on the amount withdrawn.
- 59 1/2
- 10%
Withdrawals from an IRA must begin by age ____ or penalties will be applied.
70 1/2
IRA investments may be in variable or fixed annuities but not in _________.
-life insurance policies
The Roth Individual Retirement Account (IRA) allows individuals the opportunity to set-up retirement accounts using ________
-after-tax dollars
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.
- 5 years
- 59 1/2
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.
-forced withdrawals
______ and ______ allow any qualified retirement plan deposits to move from one account to another account without taxation.
- Rollovers
- Transfers
In a ________ the plan disburses the money from the account directly to the account depositor. The depositor has taken __________ of the funds.
- Rollover
- “Constructive Receipt”
In a “rollover “ the original amount disbursed must be deposited into the new account within _____ to avoid taxes and penalties.
-60 days
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.
-“transfer”
Tax-Sheltered Annuities are also know by…
-IRS code number 403-b
Tax-Sheltered Annuities are available to employees of:
- Nonprofit charitable organizations
- educational, religious and other organizations approved by the IRS
The IRS has an early withdrawal penalty of ___ before age _____ for Tax-Sheltered Annuities
- 10%
- 59 1/2
Keogh Plans are also known as…
-HR-10 Plans
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.
- pre-tax
- 100%
Keogh Plan eligible employees must be:
- at least 21 years of age
- worked for employer for at least 1 year
- work at least 1,000 hours per year
SEP
-Simplified Employee Pension
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.
-Simplified Employee Pension
If the employer has employees he or she is required to set-up a SEP for all employees who meet the following qualifications:
- 21 or older
- worked for the employer for at least 3 of the previous 5 years
- have received at least $600 in compensation
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.
- 25%
- $55,000
A 401K is a qualified plan established by employers to which eligible employees may make salary deferral contributions on ___________ basis
-post-tax and/or pre-tax
Two types of Buy-Sell Agreements:
- The Cross-purchase plan
- The Entity Plan
________ 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.
-Cross-purchase Plan
________ allows the business to purchases policies on the individuals in the Buy-Sell Agreement.
-Entity Plan
The official name of the Social Security Program is…
-Old Age, Survivors and Disability Insurance (OASDI)
In order to receive Social Security Retirement Benefits, a person must be _______.
-“fully insured”
Fully Insured is defined as a person who has ______ of Social Security covered work in their lifetime
-40 quarters (10 years)
Social Security Retirement Benefits can be paid beginning at age _____.
-62
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.
- 62
- 20% - 30%
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:
-403-B
Mortgage Life is what type of Life Insurance?
-Decreasing Term
Which Buy and Sell Agreement requires the partners in the business to purchase and pay for the life policies?
-Cross-purchase Plan
The 403-b will have a ________ tax penalty if withdrawals are made prior to age 59½.
-10%
The earliest age that a person may receive his or her Social Security retirement benefits is age ______.
-62
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?
-6
Credit Life is what type of Life Insurance?
-Decreasing Term
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:
-the “black-out” period
Group Life insurance is which of the following types of life insurance?
Level Term
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;
-$250
Employer group life insurance plans in which employees pay part of the premiums are referred to as:
-contributory plans
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?
-3
