Wow Flashcards
Key person dies=
Tax-free BENEFIT
When employer gives Emp wage increase in amount of premium on new life ins polic this is
Fraternal association
Aleatory contract
Executive bonus
Executive bonus
All following true re executive bonus except
It is not considered non qualified employee benefit
Owned by company
Any type of ins policy may be used
Emp pays bonus to selected employee to fund policy
Policy is owned by the company
Partnership buy sell agreement in which each partner purchases ins on life of each other partner is called
Key person plan
Cross purchase plan
Split dollar plan
Cross purchase plan
In exec bonus plan who is owner of policy and who pays premium
Exec is owner and exec pays premium
Company is owner but exec pays premium
Board of directors is owner and board pays premium
Exec owner and exec pays premium
Key person life ins policy dies =
Premiums not tax deductible as business expense
Owner of 250000 life ins policy died beneficiary left proceeds with ins company and selected interest settlement option
Interest paid was 11000
Beneficiary would be required to pay income tax on
261000
239000
None
11000
11000
Death benefit is not income taxable; interest is income taxable
If taken as lump sum life ins proceeds to beneficiaries are passed
Free of fed income taxation
Tax deductible
Without interest
Free of federal income taxation
Which true concerning whole life ins
Premiums are tax deductible
Policy loans are tax deductible
Lump sum death benefits are not taxable
Lump sum death benefits are not taxable
Lump sum cash payment of life policy proceeds are tax free for
Beneficiary
In life ins policies cash value increases
Are taxed annually
Are only taxed when owner reaches65
Grow tax deferred
Are taxable immediately
Grow tax deferred
Used to name non taxed return of unused premiums
Pemium return
Interest
Surrender
Dividend
Dividend
True concerning whole life ins
Premiums tax deductible
Loans are tax deductible
Lump sum death benefits not taxable
Lump sum death benefits are not taxable
True regarding taxation of dividends participating in policies
Dividends are income for tax purposes
Dividends are not taxable
Dividends are taxable only after certain amount is accumulated annually
Dividends are taxable in some life ins policies and non taxable in others
Dividends are not taxable
Since they are return of unused premiums
Interest is subject
Not true re policy loans
Money borrowed from cash value is taxable
Loans can be repaid at death
Insurer can charge interest on outstanding policy loans
Policy loan may be repaid after policy is surrendered
Money borrowed from cash value is taxable
Can be repaid at any time including surrender and death
Can barge interest on outstanding policy loans
Insured surrenders his 100000 whole life policy; premiums paid added up to 15000; at surrender cash value was 18000. What part of surrender would be income taxable
50000
18000
15000
3000
3000
Difference between premiums paid and cash value would be taxable
Which is true re taxation of accelerated benefits under life ins policy
Always taxed
10% penalty for early distribution of death benefit
Tax free to terminally ill insured
They are tax free to terminally ill insured
Not true re policy loans
Borrowed from cash value is taxable
Policy loans can be repaid at death
Insurer can charge interest on outstanding policy loans
Money borrowed from cash value is taxable
Diagnosed with Alzheimer’s disease
Insured under life ins policy with accelerated benefits rider
Which of following is true re taxation
Entire benefit will be recd tax free
Entire living benefit is considered taxable income
Portion of benefit up to a limit is tax free rest is taxable income
Portion of benefit is free rest is taxable income
If 100000 of life ins proceeds were used in settlement option which paid 13000 for ten years which would be taxable annually
13000
10000
3000
3000
Immediate annuity purchased with face amount at death or cash value at surrender
Non taxable
Nonforfeiture
Settlement option
Settlement option
Life ins death proceeds are
Taxed as capital gain
Taxed as ordinary income
Generally not taxed as income
Generally not taxed as income
Premiums paid by Emp in business life ins policy are
Tax deductible by Emp
Always taxable to employee
Never taxable to employee
Tax deductible by employer
Which would premium be tax deductible
Paid by individual on own life ins
Paid by mother on her sons policy
Paid by Emp on 30000 group term life ins plan for emps
Paid on 30000group term life ins plan for emps
