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Life Insurance And Health Insurance (Combined The 5 Largest Study Sets) - Questions & Answers
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Life Insurance And Health Insurance (Combined The 5Largest Study Sets) - Questions & Answers
Section 529 Plans Correct Ans - - state provided
- can be funded by after tax dollars
- can pay prepaid tuition
- All earnings exempt from federal taxes
- If withdrawn for unqualified withdrawl, 10% penalty
Roth IRA Correct Ans - private retirement plan that taxes income
before it is saved, but which does not tax interest on that income when funds
are used upon retirement
Distributions don't have to start before 70.5
401(k) plan Correct Ans - Elective deferral plan that allows employee
to reduce compensation by a stated percentage on a tax deductible/ tax
differed basis; often the employer matches the employee contributions
Simplified Employee Pension (SEP) Correct Ans - A qualified plan in
which a smaller employer contributes specified amounts directly into IRA
accounts on behalf of eligible employees
403(b) plan Correct Ans - An elective deferral plan for employees of
organizations such as school systems, churches, and hospitals
Keogh Plan Correct Ans - Retirement plan for self-employed individual
and their qualified employees
Rollover Correct Ans - Tax free withdrawal of cash or other assets
from one retirement program and its reinvestment in another program. It is
not considered income and it is not taxable until a later withdrawal. Has to be
completed in 60 days
Transfer Correct Ans - When amounts of a qualified plan are
transferred to another qualified plan
Employee Retirement Income Security Act (ERISA) Correct Ans -
Federal law that increased the responsibility of pension plan trustees to
,protect retirees, established certain rights related to vesting and portability,
and created the Pension Benefit Guarantee Corporation
profit-sharing plan Correct Ans - a benefit whereby employees may
share in the profits of the business
Catch-up Contributions Correct Ans - -for those aged 50 or older
-additional $1,000 annually
**Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA) -
established the catch up provisions**
Rollover time frame Correct Ans - 60 days
Keogh Plan Correct Ans - A federally-approved, tax-deferred savings
program for self-employed people, allowing them to set money aside for their
retirement.
Annuity Period Correct Ans - the payout period of an annuity
Flexible Premium Annuity Correct Ans - allows the owner to vary the
premium payments
Deferred Annuity Correct Ans - An annuity that starts sometime in the
future.
Variable Annuity Correct Ans - Annuity that has a varying rate of
return based on the mutual funds in which one has invested
Gramm-Leach-Bliley Act Correct Ans - requires financial institutions to
ensure the security and confidentiality of customer data
Certificate of Insurance (COI) Correct Ans - proof that the insured has
insurance
Market conduct Correct Ans - refers to the marketing practices of
insurers and agents that involve interaction with insureds, claimants, or
consumers
,expense loading Correct Ans - the amount needed to pay all expenses,
including commissions, general administrative expenses, state premium taxes,
acquisition expenses, and an allowance for contingencies and profit
Straight Life Annuity Correct Ans - The payout option that will
guarantee an annuity payment for the remainder of an individual's life. This
option typically provides the largest monthly payment.
Refund Life Annuity Correct Ans - Provides annuity payments for the
annuitant's lifetime with the guarantee that in no event will total income be
less than the purchase price of the contract. If the annuitant dies before
receiving this amount, the difference is paid to a named beneficiary either as a
cash refund or in installments.
convertible term policy Correct Ans -
Aleatory Contract Correct Ans - a contract where the values exchanged
may not be equal but depend on an uncertain event
Insurance Dividends Correct Ans - Considered to be a return of
overpaid premiums and is not taxable. You can get the dividend in the form of
CRAPPO
- Cash
- reduction of premium
- allow the dividends to accumulate at interest (the money earned on the
returned dividend is taxable as ordinary income
- Paid up permament addition - you can purchase additional whole life policy
and the price will change depending on dividend and age
-paid up option - pay up policy earlier than expected
- one year term - use dividends to purchase additional term insurance for 1
year (after 1 year, the term expires)
insurance benefit Correct Ans - Advantage, privilege, right, or financial
reimbursement
Insurance Considerations Correct Ans - The easiest way to protect
yourself and your organization from the legal liability and financial loss
associated with environmental safety risks is through insurance. Coverage by
insurance allows the facility to transfer the potentially devastating financial
, risk of a future loss for the cost certainty of a monthly or yearly payment (i.e.,
premium).
Adverse Selection Correct Ans - A high-risk person benefits more from
insurance, so is more likely to purchase it.
qualified retirement plan Correct Ans - A retirement savings plan
approved by the Internal Revenue Service that provides individuals with a tax
benefit
Unilateral Contract Correct Ans - promise in exchange for an act
Elements of a Contract Correct Ans - offer, acceptance, consideration
Section 1035 (Policy Exchanges) Correct Ans - Due to the fact that life
insurance, annuities and endowments are all similar in nature (though they
have their differences), the IRS, under certain circumstances, allows for the
exchange of one policy for another without taxation to the individual, as long
as funds are not distributed to the individual in the process.
limited pay life insurance Correct Ans - A form of whole life insurance
characterized by premium payments only being made for a specified or
limited number of years.
annuity Correct Ans - payment received every year
Mutual Insurance Company Correct Ans - A type of insurance company
owned by its policyholders.
Whole Life Insurance Policy Correct Ans - the cash value is greatest at
the end of the policy period, and the insurance protection is greatest at the
start of the policy
class beneficiary Correct Ans - a member of a group, e.g., children of
the insured
Tertiary Beneficiary Correct Ans - The third in line to receive the
benefits of a life insurance policy.
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