Wrong Answer Book

Question 1

Loss control (5)

Answer 1

Diversify
Retain
Transfer
Avoid
Reduce

Question 2

Insurer pays claim, takes legal right of insured against 3rd party

Answer 2

Subrogation

Question 3

Outlines basic promise of insurance company

Answer 3

Insuring agreement

Question 4

Insurance policy that pays dividend, intentional overcharge

Answer 4

Participating policy

Question 5

Create extra hazardous condition that leads to others losses

Answer 5

Absolute liability

Question 6

HO-4

Answer 6

Renters policy, no structure

Question 7

HO- 6

Answer 7

Condo Policy

Question 8

Condo Policy

Answer 8

HO-6

Question 9

Renters policy

Answer 9

HO-4

Question 10

Umbrella policy pays

Answer 10

Judgement against - required underlying coverage abouts

Question 11

COBRA Election period

Answer 11

60 days following notification

Question 12

Terminally ill w/ life insurance options

Answer 12

Sell to Viactical company tax-free

Question 13

APL

Answer 13

borrow from cash value to pay premiums in default

Question 14

Universal life benefits

Answer 14

Provides protection for premium paid
Flexible premium
Separates savings and protection components

Question 15

Whole life benefits

Answer 15

Policy loans
Cash for estate tax
Level premiums

Question 16

Young and high risk tolerance choose this life insurance

Answer 16

Variable universal life

Question 17

Variable universal life death benefit

Answer 17

Face value + cash value

Question 18

Insurance policies purchased before XXXX not subject to MEC

Answer 18

1988

Question 19

Actual Cash Value (ACV)

Answer 19

Replacement cost - depreciation

Question 20

Premium Bond

Answer 20

Current yield > YTM

Question 21

Discount Bond

Answer 21

Current Yield < YTM

Question 22

US GOV guaranteed securities

Answer 22

STRIPS
GNMA
EE Bonds

Question 23

Fund import/export

Answer 23

Bankers acceptance

Question 24

Beta expresses

Answer 24

Volatility
Systemic risk

Question 25

Treasury taxation

Answer 25

No subject to state or local tax, only Federal

Question 26

Child support tax treatment

Answer 26

Tax-free to payee
Nondeductible to Payor

Question 27

More than $25mm revenue, uses investors.

Accounting method?

Answer 27

Accrual

Question 28

Adjusted Basis

Answer 28

Cost Basis - CRDs

CRD (cost recovery deductions)
= depreciation

Question 29

Reduce AMT

Answer 29

Increase taxable income ->
Pay more regular taxes

Question 30

Impacts money purchase plan

Answer 30

Salary goes up -> contributions go up

Investment returns no impact

Question 31

Which plans reallocate forfeitures to other participants

Answer 31

Profit sharing
Money purchase

Question 32

Profit sharing plan contributions must be

Answer 32

“Substantial and recurring”

Question 33

Cliff vesting punishes?

Answer 33

Turnover

Question 34

No pension and AGI too high for ROTH

Answer 34

Deductible IRA

Question 35

Avoid ROTH Distributions Tax?

Answer 35

Age 59 1/2
Assets maintained 5 years

Question 36

Mandatory high contribution (qualified plan)?

Answer 36

Money purchase

Question 37

Plan that precludes company from having other retirement plan?

Answer 37

SIMPLE

Question 38

SEP exempt from ___ & ___ taxation

Answer 38

FICA
FUTA

Question 39

Employees are:

Young
Successful
Want to retain key employees

Use which plan?

Answer 39

Money Purchase Plan

Question 40

Plan key words:
Flexible employee contributions, no employee contributions, loan provisions, and integration with social security

Answer 40

Profit sharing plan (PSP)

Question 41

No gain or loss on gifted property IF

Answer 41

Between FMV and Basis’