Exclusion Ratio
Calculation method used to determine the annuity amounts to be excluded from taxes
Last In, First Out
(AKA LIFO) Principle applied to asset management in life insurance products, under which it is assumed that the funds paid into the policy last will be the first paid out
First In, First Out
(AKA FIFO) Principle under which it is assumed that the funds paid into the policy will be paid out first
Policy Endowment
Maturity Date
Policy Proceeds
In life insurance, the death benefit
Surrender
Early termination of a policy be the policyowner
Premiums
These payments made into a policy are not tax deductible
Death Benefit
If the beneficiary in a policy receives the ______________ as a lump-sum, it is tax free, but if it is has interest from installments, the interest is taxable
Dividends
Since _________ are a return of unused premiums, they are not considered income for tax purposes, but the interest earned on them is
Cash Value
The __________ on pertinent policies will grow tax deferred, an interest earned is taxable
Policy Loan
If the policyowner takes out a ___________, it is not taxable
Surrenders
If the policyowner __________ a policy, the cash value received, if greater than premiums, is taxable
7-pay Test
Test to determine if the cumulative premiums paid during the first 7 years of the policy exceed the total amount of net level premiums that would be required to pay the policy up
Modified Endowment Contract
An insurance policy that is over funded, does not receive the standard tax benefits of a life insurance contract, and fails the 7-pay test
Cost Base
The portion of an annuity premiums that is nontaxable and is the anticipated return of the principal paid in
Tax Base
The portion of an annuity premiums that is taxable and is the interest earned on the principal
50
The penalty is __% of the shortfall from the required annual amount for annuities that are not large enough for distributions by a certain age
10
The penalty is __% for premature distributions under annuity contracts before the age of 59.5
Corporate-owned
When annuities are ________-_____, growth is not tax deferred, interest income is taxed annually unless is it a group annuity and employees receive a certificate of participation
Section 1035
____________ exchanges are nontaxable, exchanges in which a life insurance policy for another life insurance policy, endowment contract, or an annuity, and endowment contract for an endowment contract or annuity, or an annuity for an annuity