High 5 Risk Management, Insurance, and Employee Benefits Planning

Question 1

true or false?

loans under a non MEC are usually tax free

Answer 1

true

Question 2

true or false?

partial withdrawals are received tax free up to the basis unless it is a MEC

Answer 2

true

Question 3

is the cash value in a life insurance policy taxed as it builds up/grows?

Answer 3

no

Question 4

cash value withdrawals on life insurance policies typically use ____ tax accounting

Answer 4

FIFO

Question 5

MEC are subject to ____ basis recovery

Answer 5

LIFO

Question 6

can you ever switch a contract from a MEC to a non MEC?

Answer 6

no

Question 7

true or false?

if the corporation is paying life insurance premiums for the employee and the corporation is not the beneficiary then they can deduct the premium payments for tax purposes and the employee includes the premium payments in their gross income

Answer 7

true

Question 8

true or false?

if interest only payments are selected under a death benefit under a life insurance policy, the payments will be taxable

Answer 8

true

Question 9

if there is a named beneficiary life insurance insurance death benefits will avoid ____

Answer 9

probate

Question 10

ownership under a life insurance policy includes ______

Answer 10

right to assign the policy
right to change beneficiary
right to change policy provisions

Question 11

true or false?

if the decedent owns the life insurance policy and the proceeds are payable to the spouse, the proceeds will be included in the gross estate

Answer 11

true, but then the spouse can use the unlimited marital deduction

Question 12

under a viatical agreement, the insured is expected to die within ___ months

Answer 12

24

Question 13

for annuities purchased before August ____ the FIFO method of taxation is used

Answer 13

14, 1982

Question 14

what is the objective of split dollar life insurance?

Answer 14

to merge the employee’s need for life insurance with the premium paying ability of the employer

Question 15

____ is used when the employer owns the policy and is primarily responsible for paying life insurance premiums

Answer 15

endorsement

Question 16

____ method is used when the employee is the owner of the policy and is responsible for life insurance premium payments

Answer 16

collateral assignment

Question 17

who benefits from key employee life insurance?

Answer 17

the employer

Question 18

who pays the premium under key employee life insurance?

Answer 18

the employer

Question 19

who owns the policy under a key employee life insurance?

Answer 19

the employer

Question 20

are premiums deductible to the employer under key employee life insurance?

Answer 20

no

Question 21

who benefits from an executive bonus life insurance policy?

Answer 21

employee

Question 22

who pays the premiums under an executive bonus life insurance policy?

Answer 22

employer

Question 23

who is the policy owner under an executive bonus life insurance policy?

Answer 23

employee

Question 24

true or false?

a secular trust qualifies as a substantial risk of forfeiture

Answer 24

false

Question 25

true or false? a rabbi trust qualifies as a substantial risk of forfeiture

Answer 25

true

Question 26

are rabbi trust funds still subject to employer's creditors?

Answer 26

yes

Question 27

are secular trust funds still subject to employer's creditors?

Answer 27

no

Question 28

when does taxation occur under a rabbi trust?

Answer 28

when the funds are distributed

Question 29

when are payments deductible for the employer under a secular trust and a rabbi trust?

Answer 29

``` secular = when contribution is made rabbi = when payments are distributed to employee ```

Question 30

what is the maximum value of stock with respect to which ISOs may first become exercisable in any one year?

Answer 30

$100k

Question 31

True or false? ISOs are only granted to employees of the company

Answer 31

true

Question 32

short term disability usually provides coverage for up to ___ years

Answer 32

2

Question 33

short term DI policies are often limited to ___% of weekly wages

Answer 33

60%

Question 34

the inability to engage in one's own occupation

Answer 34

own occupation DI

Question 35

true or false? own occupation is the most expensive form of DI

Answer 35

true

Question 36

under a ____ the insured cannot be working to claim benefits

Answer 36

modified own occupation

Question 37

the inability to engage in any occupation

Answer 37

any occupation

Question 38

the inability to engage in any reasonable occupation for which one might be suited by education, experience, or training or for which one could easily become qualified

Answer 38

modified any occupation

Question 39

to receive social security disability benefits, the disability must have lasted for ___ months and be expected to last a total of ____ months or result in death

Answer 39

5 ; 12

Question 40

if disability benefits are received from an employer provided DI policy and the employer paid all premiums, will the benefits be taxable to the employee?

Answer 40

yes

Question 41

if a group disability policy premium is partially paid by the employer and partially paid by the employee, are the benefits received taxable?

Answer 41

yes, the employer share would be taxable

Question 42

if disability benefits are received from a personally paid DI policy, will the benefits be taxable?

Answer 42

no

Question 43

are business overhead expense insurance premiums deductible to the business?

Answer 43

yes

Question 44

are business overhead expense benefits taxable to the business?

Answer 44

yes

Question 45

true or false? a transfer from a FSA to HSA counts against the annual contribution limit

Answer 45

false

Question 46

what are the 6 daily activities of daily living?

Answer 46

bathing, eating, dressing, toileting, transferring, continence

Question 47

Medicare covers only a maximum of ___ days of skilled nursing care and only the first ___ days are covered at 100%

Answer 47

100 ; 20

Question 48

medicaid is designed to provide benefits for the ___ and ___

Answer 48

indigent and impoverished

Question 49

true or false? a qualified long term care insurance policy cannot pay for expenses reimbursable under Medicare

Answer 49

true

Question 50

can long term care benefits be included in a cafeteria plan or FSA account?

Answer 50

no

Question 51

this type of long term care insurance provides for a specific dollar amount of assets which would be protected if the client used up all of the long term care insurance benefit and had to apply for Medicaid

Answer 51

partnership long term care

Question 52

true or false? an HO-3 policy can include open perils for personal property

Answer 52

true, but you have to add the endorsement

Question 53

HO -4 is a ____ insurance policy

Answer 53

renters

Question 54

HO-6 is a ____ insurance policy

Answer 54

condo

Question 55

HO-8 is a ____ insurance policy

Answer 55

historical

Question 56

HO-3 and HO-5 give you the ___ coverage

Answer 56

broadest

Question 57

a ___ policy provides open perils coverage for dwelling and personal property

Answer 57

HO-5

Question 58

a ____ endorsement can be added to HO-3 to add open perils coverage to personal property

Answer 58

HO-15

Question 59

Section 1 of HO policies include coverage for _____

Answer 59

property and loss of use

Question 60

Section 2 of HO policies include coverage for ___

Answer 60

liability and medical

Question 61

Coverage A is for the ___

Answer 61

dwelling

Question 62

Coverage B is for ___

Answer 62

other structures

Question 63

Coverage C is for ____

Answer 63

personal property

Question 64

Coverage D is for ___

Answer 64

loss of use

Question 65

Coverage D is usually equal to ___% of dwelling coverage

Answer 65

20%

Question 66

Coverage C is usally equal to __% of dwelling coverage

Answer 66

50%

Question 67

Coverage B is usally equal to __% of dwelling coverage

Answer 67

10%

Question 68

Coverage A should be equal to ___% of replacement cost

Answer 68

100%

Question 69

Coverage E is for ___

Answer 69

personal liability (bodily injury and property damage)

Question 70

Coverage F is for ___

Answer 70

medical payments

Question 71

HO-8 policies have ____ coverage for all coverages

Answer 71

basic

Question 72

HO-2 policies have ___ coverage for all coverages

Answer 72

broad

Question 73

HO-4 policies have ____ coverage for personal property

Answer 73

broad

Question 74

do HO-4 policies have coverage A or B?

Answer 74

no

Question 75

HO-4 policies have ___ coverage for loss of use

Answer 75

broad

Question 76

HO-3 policies have __ coverage for the dwelling and other structures

Answer 76

open

Question 77

HO-3 policies have ___ coverage for personal property unless there is an endorsement

Answer 77

broad

Question 78

HO-3 policies have ___ coverage for loss of use

Answer 78

open

Question 79

HO-5 policies have ___ coverage for all coverages

Answer 79

open

Question 80

HO-6 policies have __ coverage for personal property and loss of use

Answer 80

broad

Question 81

HO-6 policies have ___ coverage for dwellings

Answer 81

limited

Question 82

HO-6 policies have __ coverage for other structures

Answer 82

none

Question 83

are death benefits under key employee life insurance taxable?

Answer 83

no

Question 84

can employers deduct the bonus paid to executives for executive bonus life insurance plans?

Answer 84

yes