lifeins t9 - #20. A corporation is the owner and...

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#20. A corporation is the owner and beneficiary of the key person life policy. If the corporation collects the policy benefit, then a)The amount is subject to the exclusionary rule.b)IRS has no jurisdiction.c) The amount received is taxable income. d) The amount received is tax-free. Should a key person die, the benefit is treated as a reimbursement to the business for loss of services from that key person. #22. Your client uses $50,000 in inheritance money to purchase a single premium immediate annuity. How soon can he begin receiving income payments? a) No later than 1 year from the time of purchaseb)No sooner than 6 months from the time of purchasec) At age 65 d)After 2 years With an immediate annuity, distribution starts within 1 year of purchase. #23. Which of the following is NOT true regarding the annuitant? a)The annuitant’s life expectancy is taken into consideration for the annuity.b)The annuitant receives the annuity benefits.c) The annuitant must be a natural person. d) The annuitant cannot be the same person as the annuity owner. While they don’t have to be, the annuitant and annuity owner are often the same person. The annuitant is the person who receives benefits or payments from the annuity and for whom the annuity is written. Since the annuitant’s life expectancy is taken into consideration, the annuitant must be a natural person. #24. Which of the following distinguishes a Group Life Policy from an Individual Life Insurance Policy? a)Lower persistencyb)Higher premiumc) Higher underwriting costs d) Reduced adverse selection In order to reduce adverse selection, a Group Life Policy requires a minimum number of participants in the group, depending on who pays the premium. #25. When contributions to an immediate annuity are made with before-tax dollars, which of the following is true of the distributions? a) Distributions are taxable.b)Distributions are nontaxable.c) Distributions cannot begin prior to age 70½. d)There are no distributions. If contributions are made with before-tax dollars, contributions to this fund are fully taxable. Distributions must begin no later than age 70½ in order for the annuitant to avoid penalties. The penalty is 50% of the shortfall from the required annual amount.
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This note was uploaded on 11/22/2010 for the course LIFE INSUR 245 taught by Professor Knowles during the Spring '10 term at El Centro College.

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lifeins t9 - #20. A corporation is the owner and...

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