Q 97-120 Flashcards
Settlement Option Choices
Leave at (taxable interest), Fixed $,Fixed period:Life anuity options:-Pure life, Life income, Life, Joint&survivor, Joint
Annuity Payout Option - Pure Life
Pure life - income paid for life (balance forfeited to co) - best if live past expected
Annuity Payout Option - Temporary Period
Temporary period - pay only a stated number of years, not for life
Personal Use Annuities
build a tax-deffered retirement fund/ educational fund / ira, 401k, sep, SIMPLE, Keogh HR-10
Equity Indexed Annuities
annuity varies with S&P500. principal guraenteed, possible larger gains. Min rate guarenteed so can be sold with life licence.
Variable Annuities
Prem invested into separate account of co. credited with accumulation units durring prepayment years, fixed units during payout
Policy Loans
CV may be pledged as collateal for loan from ins. Co. Interest charged until loan paid back. Loans not taxed.
Automatic Premium Loan (APL)
Option that gives co. right to pay overdue prem. From CV. Loan & interest not paid is added to orig loan
Annuity Payout Option - Life income “refund”
Life income refund” - income paid for life, any balance of principal paid to beneficiary at death
Annuity Payout Option - Life income period certain
Life income period certain - income paid for certain # years to annuitant or their beneficiary, or annuitant for life (greater)
Annuity Payout Option - Joint & Survivor
Joint & survivor - Income paid till last of 2 annuitants dies. $ decreases after first death
Annuity Payout Option - Joint
Joint - pays to 1st death of 2 annuitants
Fixed loan rate, Variable loan rate
Max fixed 8% charged on loans, Variable based on Moody’s Bond Index
How much paid at insured death?
Face amount paid - minus loans and past interest, and overdue premiums during grace period
Income tax at surrender of policy
gain in life policy is taxable (CV-prem paid) only at surrender of policy
Accelerated Death Benefit
provision that advances DB for terminally ill or nursing home. Balance paid to beneficiary when later dies
Modified Endowment Contract (MEC)
If policy Single prem or fails 7 pay test, any loans/surrenders will be taxed as income plus 10% before 59.5. DB tax free
Business Insurance
3rd party LI used to buy interst of a business owner. Stock redemption-for corporations(1/owner), Partnerships(1 every other partner)
Viatical Settlements
Sale of LI policy of terminally ill “viator” to 3rd party “broker”. Broker receive DB, special licence, 15 day right of recisison
Non-Qualified Plans
Co. may provide extra plans to selected employees (not all). Prem not tax deduction.
Group LI
Min $ LI provided, co. pays all prem, may be converted to whole life 31 days after termination. Prem deductable by co.
Max Term given without economic befefit tax
50,000 max term can be provided without employee paying tax for excess benefit
Trad IRA
May put in $5500/yr if working. $ grows tax deferred, pre 59.5 +10% tax, must withdraw 70.5, over 50 +$1000/yr
Roth IRA
$5500, +1000 over 50, not tax deductable, grows tax deferred, distributions tax free after 59.5 and open for 5 years. FHB $10,000 withdraw
Premiums
consideration paid by insured to ins. Co. in exchange for ins protection. Paid anually, semi-anually, quarterly, or mo.
Taxes & Ins. Prem and Proceedures
Ind. LI prem not tax deductable. DB are include in estate of deceased for federal estate tax purposes. Gifts of inforce are recaptured in estate for 3 year
Dividneds & Taxes
Dividends are considered return of excess prem, not taxable, not guranteed. Shown as estimates only
Powers of the Ins. Superintendant/Commisioner/Director
Director can: 1. Approve agent appointments, Hold hearings, fines, susspend, audit co., enforce insurance laws
