Question 1

Federal Estate Taxes:

Accepted Answer

A)  are also called uniform transfer taxes 
B)  are different from state to state 
C)  are levied on the fair market value of the gross estate 
D)  are levied on the taxable estate 
A)  are also called uniform transfer taxes 
B)  are different from state to state 
C)  are levied on the fair market value of the gross estate 
D)  are levied on the taxable estate

Question 2

Financial planners:

Accepted Answer

A)  should be knowledgeable of many topics 
B)  will make decisions for their clients 
C)  can assist people in the financial planning process 
D)  A and C above 
A)  should be knowledgeable of many topics 
B)  will make decisions for their clients 
C)  can assist people in the financial planning process 
D)  A and C above

Question 3

Life insurance policy owners have several ways by which to access the cash savings in their life insurance policies while the insured is still alive. Which of the following is not one of those ways?

Accepted Answer

A)  Invest cash value in the insurer's stock and then receive shareholder dividends 
B)  Participating policy dividends 
C)  Withdraw the cash value 
D)  Take a lump sum settlement if the insured is terminally ill 
A)  Invest cash value in the insurer's stock and then receive shareholder dividends 
B)  Participating policy dividends 
C)  Withdraw the cash value 
D)  Take a lump sum settlement if the insured is terminally ill

Question 4

What are the main financial planning problems encountered in the "early adult" years?

Accepted Answer

The main financial problems encountered

Question 5

A terminally ill insured may be able to withdraw life insurance death benefits on tax-free basis while still alive.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following is true?

Accepted Answer

A)  The government discourages retirement saving by providing no tax incentives. 
B)  To discourage the pre-retirement withdrawal of tax advantaged retirement savings plans, the government imposes a 20% early withdrawal penalty. 
C)  To discourage the pre-retirement withdrawal of tax advantaged retirement savings plans, the government imposes a 10% early withdrawal penalty on withdrawals made before age 62. 
D)  If a 40-year-old person becomes disabled, she may be allowed to withdraw tax advantaged savings without paying a tax penalty. 
A)  The government discourages retirement saving by providing no tax incentives. 
B)  To discourage the pre-retirement withdrawal of tax advantaged retirement savings plans, the government imposes a 20% early withdrawal penalty. 
C)  To discourage the pre-retirement withdrawal of tax advantaged retirement savings plans, the government imposes a 10% early withdrawal penalty on withdrawals made before age 62. 
D)  If a 40-year-old person becomes disabled, she may be allowed to withdraw tax advantaged savings without paying a tax penalty.

Question 7

When a person dies, the gross estate is:

Accepted Answer

A)  taxed at the rate of 50% 
B)  adjusted for certain gifts made during the decedent's lifetime 
C)  subject to the federal estate and gift tax 
D)  not taxed if death bed gifts are made to eligible children 
A)  taxed at the rate of 50% 
B)  adjusted for certain gifts made during the decedent's lifetime 
C)  subject to the federal estate and gift tax 
D)  not taxed if death bed gifts are made to eligible children

Question 8

Which of the following is not a feature of a 529 Plan?

Accepted Answer

A)  Withdrawals for nonqualified expenses are prohibited. 
B)  The contributor owns the account. 
C)  The account owner can change the beneficiary. 
D)  The account owner determines the investment strategy. 
A)  Withdrawals for nonqualified expenses are prohibited. 
B)  The contributor owns the account. 
C)  The account owner can change the beneficiary. 
D)  The account owner determines the investment strategy.

Question 9

The use of life insurance for estate preservation is needed only by the very wealthy.

Accepted Answer

A) True 
 B)False

Question 10

The text mentioned several reasons for purchasing "business" life insurance. Which of the following reasons was not mentioned?

Accepted Answer

A)  Business continuation 
B)  Fringe benefits 
C)  Key person insurance 
D)  Protection from creditors' claims 
A)  Business continuation 
B)  Fringe benefits 
C)  Key person insurance 
D)  Protection from creditors' claims

Question 11

Typically which of the following results from a financial plan?

Accepted Answer

A)  Start saving more 
B)  Write or update a will 
C)  Purchase more life insurance 
D)  All of the above 
A)  Start saving more 
B)  Write or update a will 
C)  Purchase more life insurance 
D)  All of the above

Question 12

The main financial problem associated with the early adult years is:

Accepted Answer

A)  compensating for loss of income to the family in the event of a premature death of main wage earner 
B)  loss of retirement income in the event of a premature death of main wage earner 
C)  the problem of paying estate taxes 
D)  providing lifelong income for the children 
A)  compensating for loss of income to the family in the event of a premature death of main wage earner 
B)  loss of retirement income in the event of a premature death of main wage earner 
C)  the problem of paying estate taxes 
D)  providing lifelong income for the children

Question 13

The federal estate tax will take a greater percentage of a large estate as well as a larger number of dollars.

Accepted Answer

A) True 
 B)False

Question 14

Financing retirement is a challenge for many Americans. Which of the following is not a reason that retirement planning has become more challenging?

Accepted Answer

A)  Many employers no longer fund retirement programs for their employees. 
B)  Many employees have complicated but generous health insurance plans provided by their employer. 
C)  Social Security has increased the normal retirement age and lowered benefit targets. 
D)  Increases in longevity put a greater burden on retirement savings. 
A)  Many employers no longer fund retirement programs for their employees. 
B)  Many employees have complicated but generous health insurance plans provided by their employer. 
C)  Social Security has increased the normal retirement age and lowered benefit targets. 
D)  Increases in longevity put a greater burden on retirement savings.

Question 15

What is a charitable deduction?

Accepted Answer

A)  A deduction from the cash value to a qualified charitable organization 
B)  A deduction from the taxable estate to a church 
C)  A deduction from the taxable estate to a qualified charitable organization 
D)  A deduction from the gross estate to a qualified charitable organization 
A)  A deduction from the cash value to a qualified charitable organization 
B)  A deduction from the taxable estate to a church 
C)  A deduction from the taxable estate to a qualified charitable organization 
D)  A deduction from the gross estate to a qualified charitable organization

Question 16

With respect to a trust fund, what is the role of the trustee?

Accepted Answer

A)  Provide the initial funding for the trust 
B)  Receive the benefits of the trust 
C)  Provide management of the trust's property 
D)  Determine the beneficiary of the trust 
A)  Provide the initial funding for the trust 
B)  Receive the benefits of the trust 
C)  Provide management of the trust's property 
D)  Determine the beneficiary of the trust

Question 17

The maximum estate tax rate is 58.

Accepted Answer

A) True 
 B)False

Question 18

The early adult years are mainly characterized by pre-retirement planning.

Accepted Answer

A) True 
 B)False

Question 19

With five owners of a business, an entity purchase plan usually makes more sense than a cross-purchase plan.

Accepted Answer

A) True 
 B)False

Question 20

A "Certified Financial Planner":

Accepted Answer

A)  is a widely recognized financial planning credential 
B)  can assist people in the financial planning process 
C)  is not an existing credential 
D)  A and B above 
A)  is a widely recognized financial planning credential 
B)  can assist people in the financial planning process 
C)  is not an existing credential 
D)  A and B above

Exam 14: Professional Financial Planning

Federal Estate Taxes:

Financial planners:

Life insurance policy owners have several ways by which to access the cash savings in their life insurance policies while the insured is still alive. Which of the following is not one of those ways?

What are the main financial planning problems encountered in the "early adult" years?

A terminally ill insured may be able to withdraw life insurance death benefits on tax-free basis while still alive.

Which of the following is true?

When a person dies, the gross estate is:

Which of the following is not a feature of a 529 Plan?

The use of life insurance for estate preservation is needed only by the very wealthy.

The text mentioned several reasons for purchasing "business" life insurance. Which of the following reasons was not mentioned?

Typically which of the following results from a financial plan?

The main financial problem associated with the early adult years is:

The federal estate tax will take a greater percentage of a large estate as well as a larger number of dollars.

Financing retirement is a challenge for many Americans. Which of the following is not a reason that retirement planning has become more challenging?

What is a charitable deduction?

With respect to a trust fund, what is the role of the trustee?

The maximum estate tax rate is 58.

The early adult years are mainly characterized by pre-retirement planning.

With five owners of a business, an entity purchase plan usually makes more sense than a cross-purchase plan.

A "Certified Financial Planner":

Introduction to Enterprise Risk Management and Insurance

Risk Identification

Risk Assessment and Pooling

Risk-Handling Techniques: Loss Control, Risk Transfer, and Loss Financing

Risk-Handling Techniques: Diversification and Hedging

Fundamentals of Insurance

Insurable Perils and Insuring Organizations

Insurance Functions

Insurance Markets: Economics and Issues

Insurance Regulation

Insurance Contracts

The Personal Auto Policy

Homeowners Insurance

Life Insurance Policies

Standard Life Insurance Contract Provisions and Options

Annuities

Health Insurance and Disability Income

Employee Benefits

Social Security

Unemployment and Workers Compensation Insurance

Commercial Property Insurance

Commercial Liability Insurance

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