Wrong Answers Insurance Ch. 5 Flashcards
The amount of disability insurance is based on salary, when they say W2 income, what does that mean?
Section 162, bonus plan, premiums are already taxed by the EE therefore benefits are tax free
Medicare will pay for the first __ days of a daily nursing facility. the remaining 10 days, Medicare will pay the amount above the copayment. After 30 days, it falls on the patient
20
Even with Alzheimer’s why might someone not be covered by Medicare?
There was no hospital stay and condition is not expected to improve
reduce disability premiums
guaranteed renewable instead of non-cancellable
paid up additions vs paid up insurance
paid up additions is a dividend for participating policies
paid up insurance (reduced) is a non-forfeiture option
MEC dividends are taxed when
1) received in cash
2) used to reduce premiums
3) used to pay off a policy loan
once a MEC always a MEC
Boyyyyy
A sale to a viatical company does not create a tax liability for the seller, but…
The sale to the viatical company is a transfer for value that will subject the beneficiary to income tax on the proceeds.
Are gifts transfers of value?
No
when do creditors have rights to buy-sell agreements?
stock redemption but not cross-purchase
cross purchase step up
decedent’s estate and decedent’s shares owned by the remaining owner(s) get a step-up in basis
when an annuity is owned by a nonnatural person, how are gains/income taxed?
ordinary income in the current tax year
annuities don’t declare capital gains
if there is a net gain on the sale of a life insurance policy (insured buys a policy on insured), how is the tax treated?
ordinary income tax (paid more than the previous owner paid in premiums)
Is group disability convertible?
No
life and health group insurance provide conversion features.
true
