Taxes,Retirement Flashcards
Group insurance is written as
annually renewable term insurance
group underwriting differs from that of individual insurance, and is based on the group characteristics and makeup which include:
1) Purpose or nature of the group
2) Size of the group
3) Turnover of the group
4) Financial Strength of the group
Another unique aspect of group underwriting is that the cost of coverage is based on the average age of the group and the
ratio of men to women
In order to reduce adverse selection, the insurer will require a minimum number of participants in the group, depending on whether the employer or employees pay the
premium
Another characteristic of group insurance is the conversion privilege. If an employee terminates membership in the insured group, the employee has the right to convert to an individual policy ____ ____ ___ at a standard rate, based on individuals attained age
without proving insurability
If the insured dies during the conversion period, a death benefit equal to the maximum amount of individual insurance which would have been issued must be paid by the group policy, whether or not the application for the individual policy was
completed
If a maser contract is terminated, every individual who has been on the plan for at least ___ years will be allowed to convert to individual permanent insurance of the same coverage
5
When an employer pays all of the premiums, the plan is referred to as a _______ ____. Under this, an insurer will require 100% of all the eligible employees to be included in the plan
noncontributory plan
Key person insurance may be issued as term or permanent life, with _______ and _____ policies being used most often
whole life and universal life
With key person insurance, business cannot take a ____ _______ for the expense of the premium. However if key employee dies, the benefits paid to the business are usually received tax free
tax deduction
A _______ is a legal contract that determines what will be done with a business in the vent than owner dies or becomes disabled. Also referred to as a business continuation agreement
buy-sell agreement
_____ ____ is an arrangement where the employer offers to give the employees a wage increase in the amount of premium on a new life insurance policy on the employee. Considered a nonqualified benefit plan
Executive bonus
Executive bonus is ____ _____ to the employer and income taxable to the employee
tax deductible
An employer-sponsored qualified retirement plan is approved by the _____ which then gives both the employer and employee benefits such as deductible contributions and tax-deferred growth
IRS
A ______ is a tax-free distribution of cash from one retirement plan to another. Generally, IRA ____ must be completed within 60 days from the time the money is taken out of the first plan
rollover
The term _____ refers to a tax-free ____ of funds from one retirement program to a traditional IRA or a ____ of interest in a traditional IRA from one trustee directly to another
transfer
HR-10 or ______ make it possible for self-employed persons to be covered under an IRS qualified retirement plan. These plans allow the self-employed individuals to fund their retirement programs with pre-tax dollars as if under corporate retirement or pension plan. Must be self-employed or a partner who owns at least 10% of the business
Keogh plan
Contributions to HR-10 plans is _______ and it accumulated tax deferred until withdrawn
tax deductible
In a SEP employer contributions are __ included in the employees gross income. Primary difference between SEP and an IRA is the much larger amount than can be contributed each year to a SEP
not
A _____ plan is available to small businesses that employ no more than 100 employees who receive at least $5,000 in compensation from the employer during the previous year.
SIMPLE
Tax is ____ on both contributions and earning until funds are withdrawn in a SIMPLE plan
deferred
If 401 (k) plan does not provide a definite formula for figuring the profits to be shared, employer contributions must be
systematic and substantial
Premiums are not
tax deductible
Cash values grow
tax deferred
