Tax considerations – Lesson 8 Flashcards
Upon receiving an annuity payments, the entire amount is not taxable. True or false?
False
What are accelerated benefits?
Benefits received if an insured is terminally ill and needs the benefits to pay for care.
Proceeds from a life insurance policy:
Tax free
Exchanging life policy for an annuity contract is not subject to taxation. True or false?
True
When a policyowner takes out a loan against the cash values in the policy, it is taxable event. True or false?
False
Are there any tax implications when a policy owner surrenders a permanent policy?
The amount in excess of the cost basis is subject to taxation.
Which of the following dividend options may have some tax implications: cash, one-year term, reduced premium, or accumulate at interest.
Accumulate at interest
Premiums paid for a person’s individual life policy may be deducted from his income tax. True or false?
False
One way to reduce an estate is to make gifts of money. What one of the correct way of doing it?
A husband-and-wife each may make gifts of money up to $13,000 yearly each, to whomever they choose.
Life insurance policies must conform to what kind of test?
- Cash value accumulation test
2. Guideline premium and Corridor test
Section 1035 of the Internal Revenue Code allows what type of exchange?
A life policy exchanged for another like-kind policy, with no gain or loss, is not subject to any tax.
Distributions from a modified endowment contract before the policy owner reaches what age there will be a 10% penalty in addition to the regular income tax?
59 1/2
If a company were to purchase group permanent life insurance, the employer contributions are treated as taxable income to the employees. True or false?
True
For 2012, each person can leave up to how much of an estate tax free?
$5.12 million
On January 1, 2013, the law change tHe estate tax free to what amount and how much federal tax will be imposed beyond the amounts?
$1 million and can be tax from 41% to as high as 60%.
