Question 1

If an individual is self-employed, they may take a deduction for health insurance expenses that are incurred for __________.

Accepted Answer

A) Himself or herself 
B) Their spouse 
C) Their dependents 
D) All of the above 
A) Himself or herself 
B) Their spouse 
C) Their dependents 
D) All of the above

Question 2

Life insurance policy owners can make a full or partial withdrawal of their cash value. This cash value will only be taxable, however, when __________.

Accepted Answer

A) It is worth more than what the policy owner has paid into the policy 
B) It is worth less than what the policy owner has paid into the policy 
C) It is not withdrawn 
D) It is taken out as a loan 
A) It is worth more than what the policy owner has paid into the policy 
B) It is worth less than what the policy owner has paid into the policy 
C) It is not withdrawn 
D) It is taken out as a loan

Question 3

Life insurance death benefits that are paid out to a beneficiary in a lump sum are typically not included as income to the recipient of such proceeds if the death benefit payment was made under a(n) __________.

Accepted Answer

A) Endowment contract 
B) Worker's compensation insurance contract 
C) Employer's group life insurance plan 
D) All of the above 
A) Endowment contract 
B) Worker's compensation insurance contract 
C) Employer's group life insurance plan 
D) All of the above

Question 4

When can dividends that are received by a life insurance policy holder be taxed?

Accepted Answer

A) When the dividend amount that is received exceeds the amount that the policy holder has paid in as premiums 
B) When they are received via a term life insurance policy 
C) When the death benefit is paid out to the beneficiary 
D) All of the above 
A) When the dividend amount that is received exceeds the amount that the policy holder has paid in as premiums 
B) When they are received via a term life insurance policy 
C) When the death benefit is paid out to the beneficiary 
D) All of the above

Question 5

The IRS states that the value of life insurance proceeds will be included in the insured's gross estate if the policy proceeds are payable to __________.

Accepted Answer

A) The insured's estate, in either a direct or indirect fashion 
B) Named beneficiaries, if the insured possessed an ownership interest in the policy at the time of their death 
C) Both A and B 
D) Neither A nor B 
A) The insured's estate, in either a direct or indirect fashion 
B) Named beneficiaries, if the insured possessed an ownership interest in the policy at the time of their death 
C) Both A and B 
D) Neither A nor B

Question 6

With regard to federal income taxes, the premiums that are paid into a personal life insurance policy are __________.

Accepted Answer

A) Fully deductible 
B) Partially deductible 
C) Not deductible if they are a business expense 
D) Not deductible as they are considered a personal expense 
A) Fully deductible 
B) Partially deductible 
C) Not deductible if they are a business expense 
D) Not deductible as they are considered a personal expense

Question 7

Loans that are taken from a modified endowment contract are considered to be __________ for tax purposes.

Accepted Answer

A) Dividends 
B) Premium adjustments 
C) Paid up additions 
D) Distributions 
A) Dividends 
B) Premium adjustments 
C) Paid up additions 
D) Distributions

Question 8

If a beneficiary opts to receive a life insurance death benefit in installments rather than in a lump sum, what are the beneficiary's tax consequences?

Accepted Answer

A) The total amount of installment payments received by the beneficiary, regardless of how much, will not be subject to income taxation 
B) The amount of installment payments received by the beneficiary that is in excess of the total amount of death benefit at the insured's death will be subject to income taxation 
C) The entire amount of all installment payments received by the beneficiary will be subject to income taxation 
D) If the beneficiary dies within three years of receiving the final installment payment, the entire amount of installment payments they received will be subject to income taxation 
A) The total amount of installment payments received by the beneficiary, regardless of how much, will not be subject to income taxation 
B) The amount of installment payments received by the beneficiary that is in excess of the total amount of death benefit at the insured's death will be subject to income taxation 
C) The entire amount of all installment payments received by the beneficiary will be subject to income taxation 
D) If the beneficiary dies within three years of receiving the final installment payment, the entire amount of installment payments they received will be subject to income taxation

Question 9

Life insurance policy dividends may be used in the following ways:

Accepted Answer

A) To purchase paid-up additions 
B) To reduce the policy premiums 
C) Left to accumulate 
D) All of the above 
A) To purchase paid-up additions 
B) To reduce the policy premiums 
C) Left to accumulate 
D) All of the above

Question 10

It is possible for an individual's health insurance premiums to be counted as a medical expense for the purpose of income tax deduction, as long as the premium amount and other medical expenses exceed ________.

Accepted Answer

A) 7)5 percent of the individual's insurance benefits 
B) 7)5 percent of the individual's adjusted gross income 
C) 100 percent of the individual's deductible 
D) Health insurance premiums are never deductible 
A) 7)5 percent of the individual's insurance benefits 
B) 7)5 percent of the individual's adjusted gross income 
C) 100 percent of the individual's deductible 
D) Health insurance premiums are never deductible

Question 11

In most cases, the death benefits on corporate owned life insurance policies are __________.

Accepted Answer

A) Taxable to the corporation 
B) Not taxable to the corporation 
C) Tax deductible to the corporation 
D) Taxable to the employee 
A) Taxable to the corporation 
B) Not taxable to the corporation 
C) Tax deductible to the corporation 
D) Taxable to the employee

Question 12

The group term life insurance premiums paid by an employer for up to $50,000 of coverage are considered to be a(n) __________.

Accepted Answer

A) Taxable benefit to the employer 
B) Taxable benefit to the employee 
C) Tax free benefit to the employee 
D) Tax deferred benefit to the employee 
A) Taxable benefit to the employer 
B) Taxable benefit to the employee 
C) Tax free benefit to the employee 
D) Tax deferred benefit to the employee

Question 13

At what income tax rate is the beneficiary of a life insurance policy charged on the receipt of $100,000 in death benefit proceeds?

Accepted Answer

A) 0% 
B) 28% 
C) 33% 
D) It depends on the beneficiary's individual income tax bracket 
A) 0% 
B) 28% 
C) 33% 
D) It depends on the beneficiary's individual income tax bracket

Question 14

Life insurance policy withdrawals and loans are not considered to be taxable income, unless the policy has been lapsed or surrendered with an unpaid loan. In this case, the unpaid portion of the loan must be reported by the policy holder as taxable income. The amount that is reportable as income is known as __________.

Accepted Answer

A) Phantom income 
B) Loan income 
C) Dividend income 
D) Interest income 
A) Phantom income 
B) Loan income 
C) Dividend income 
D) Interest income

Question 15

If an employee earns $40,000 in annual income and her employer pays $10,000 in premiums for her group health insurance coverage, on what amount of total income will the employee be taxed when filing her annual tax return?

Accepted Answer

A) $10,000 
B) $30,000 
C) $40,000 
D) $50,000 
A) $10,000 
B) $30,000 
C) $40,000 
D) $50,000

Question 16

If an individual owns a life insurance policy, upon their death their estate will be fully subject to tax if which of the following occurs:

Accepted Answer

A) The proceeds of that life insurance policy are payable either directly or indirectly to the individual's estate 
B) If the insured, while still alive, held an ownership interest in the policy 
C) Both A and B 
D) Neither A nor B 
A) The proceeds of that life insurance policy are payable either directly or indirectly to the individual's estate 
B) If the insured, while still alive, held an ownership interest in the policy 
C) Both A and B 
D) Neither A nor B

Question 17

Corporate owned life insurance, or COLI, is life insurance on employees' lives that is owned by the employer. In most cases, these policies are taxed as if they were individually-owned life insurance. This means that premiums are __________ and proceeds are __________.

Accepted Answer

A) Deductible, taxable 
B) Deductible, not taxable 
C) Not deductible, not taxable 
D) Not deductible, taxable 
A) Deductible, taxable 
B) Deductible, not taxable 
C) Not deductible, not taxable 
D) Not deductible, taxable

Question 18

The interest that is credited to a whole life insurance policy cash value grows on a __________ basis.

Accepted Answer

A) Taxable 
B) Tax-Free 
C) Tax-Deferred 
D) None of the Above 
A) Taxable 
B) Tax-Free 
C) Tax-Deferred 
D) None of the Above

Question 19

The proceeds from a group life insurance policy may be removed from the insured's gross estate by assigning the ownership interests to __________.

Accepted Answer

A) Their spouse 
B) Their adult child 
C) An irrevocable trust 
D) All of the above 
A) Their spouse 
B) Their adult child 
C) An irrevocable trust 
D) All of the above

Question 20

If an annuity owner passes away prior to the time that his or her annuity contract has annuitized, then the annuity contract will provide for a death benefit to be paid to a beneficiary. This death benefit will be received __________ by the beneficiary.

Accepted Answer

A) Tax free 
B) Tax deferred 
C) Taxable for the amount of death benefit that exceeds the contract owner's premium 
D) None of the above 
A) Tax free 
B) Tax deferred 
C) Taxable for the amount of death benefit that exceeds the contract owner's premium 
D) None of the above

If an individual is self-employed, they may take a deduction for health insurance expenses that are incurred for __________.

Life insurance policy owners can make a full or partial withdrawal of their cash value. This cash value will only be taxable, however, when __________.

Life insurance death benefits that are paid out to a beneficiary in a lump sum are typically not included as income to the recipient of such proceeds if the death benefit payment was made under a(n) __________.

When can dividends that are received by a life insurance policy holder be taxed?

The IRS states that the value of life insurance proceeds will be included in the insured's gross estate if the policy proceeds are payable to __________.

With regard to federal income taxes, the premiums that are paid into a personal life insurance policy are __________.

Loans that are taken from a modified endowment contract are considered to be __________ for tax purposes.

If a beneficiary opts to receive a life insurance death benefit in installments rather than in a lump sum, what are the beneficiary's tax consequences?

Life insurance policy dividends may be used in the following ways:

It is possible for an individual's health insurance premiums to be counted as a medical expense for the purpose of income tax deduction, as long as the premium amount and other medical expenses exceed ________.

In most cases, the death benefits on corporate owned life insurance policies are __________.

The group term life insurance premiums paid by an employer for up to $50,000 of coverage are considered to be a(n) __________.

At what income tax rate is the beneficiary of a life insurance policy charged on the receipt of $100,000 in death benefit proceeds?

If an employee earns $40,000 in annual income and her employer pays $10,000 in premiums for her group health insurance coverage, on what amount of total income will the employee be taxed when filing her annual tax return?

If an individual owns a life insurance policy, upon their death their estate will be fully subject to tax if which of the following occurs:

Corporate owned life insurance, or COLI, is life insurance on employees' lives that is owned by the employer. In most cases, these policies are taxed as if they were individually-owned life insurance. This means that premiums are and proceeds are .

The interest that is credited to a whole life insurance policy cash value grows on a __________ basis.

The proceeds from a group life insurance policy may be removed from the insured's gross estate by assigning the ownership interests to __________.

If an annuity owner passes away prior to the time that his or her annuity contract has annuitized, then the annuity contract will provide for a death benefit to be paid to a beneficiary. This death benefit will be received __________ by the beneficiary.

Health: Health and Life Insurance

Health: Disability

Health: Health and Dental

Health: Health Maintenance Organizations

Health: Theory in Life Insurance

Comprehensive Examination: English and Language Usage

Comprehensive Examination: Mathematics

Comprehensive Examination: Reading

Comprehensive Examination: Science

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Exam 5: Health: Tax Issues in Life Insurance

If an individual is self-employed, they may take a deduction for health insurance expenses that are incurred for __________.

Life insurance policy owners can make a full or partial withdrawal of their cash value. This cash value will only be taxable, however, when __________.

Life insurance death benefits that are paid out to a beneficiary in a lump sum are typically not included as income to the recipient of such proceeds if the death benefit payment was made under a(n) __________.

When can dividends that are received by a life insurance policy holder be taxed?

The IRS states that the value of life insurance proceeds will be included in the insured's gross estate if the policy proceeds are payable to __________.

With regard to federal income taxes, the premiums that are paid into a personal life insurance policy are __________.

Loans that are taken from a modified endowment contract are considered to be __________ for tax purposes.

If a beneficiary opts to receive a life insurance death benefit in installments rather than in a lump sum, what are the beneficiary's tax consequences?

Life insurance policy dividends may be used in the following ways:

It is possible for an individual's health insurance premiums to be counted as a medical expense for the purpose of income tax deduction, as long as the premium amount and other medical expenses exceed ________.

In most cases, the death benefits on corporate owned life insurance policies are __________.

The group term life insurance premiums paid by an employer for up to $50,000 of coverage are considered to be a(n) __________.

At what income tax rate is the beneficiary of a life insurance policy charged on the receipt of $100,000 in death benefit proceeds?

If an employee earns $40,000 in annual income and her employer pays $10,000 in premiums for her group health insurance coverage, on what amount of total income will the employee be taxed when filing her annual tax return?

If an individual owns a life insurance policy, upon their death their estate will be fully subject to tax if which of the following occurs:

Corporate owned life insurance, or COLI, is life insurance on employees' lives that is owned by the employer. In most cases, these policies are taxed as if they were individually-owned life insurance. This means that premiums are __________ and proceeds are __________.

The interest that is credited to a whole life insurance policy cash value grows on a __________ basis.

The proceeds from a group life insurance policy may be removed from the insured's gross estate by assigning the ownership interests to __________.

If an annuity owner passes away prior to the time that his or her annuity contract has annuitized, then the annuity contract will provide for a death benefit to be paid to a beneficiary. This death benefit will be received __________ by the beneficiary.

Health: Health and Life Insurance

Health: Disability

Health: Health and Dental

Health: Health Maintenance Organizations

Health: Theory in Life Insurance

Comprehensive Examination: English and Language Usage

Comprehensive Examination: Mathematics

Comprehensive Examination: Reading

Comprehensive Examination: Science

Filters

Corporate owned life insurance, or COLI, is life insurance on employees' lives that is owned by the employer. In most cases, these policies are taxed as if they were individually-owned life insurance. This means that premiums are and proceeds are .