Chapter 6 Exam

Under an Entity Purchase Plan form of a Buy-Sell Agreement, the business is all of the following, except:
A
Premium payor
B
Beneficiary
C
Policyholder
D
Insured

d

What is the minimum requirement for currently insured status under the Social Security system?
A
Earned more than minimum wage
B
At least 6 credits earned in the 13 calendar quarters prior to death, disability, or is entitled to retirement benefits
C
Have

b

All of the following are correct regarding Key Employee Life Insurance, except:
A
Premiums are deducted from the employee's salary
B
The employer is the owner/applicant of the policy
C
The beneficiary (the employer) typically receives the death benefit fr

a

A grandparent purchases a life insurance policy on a granddaughter this is an example of _________.
A
Wealth Transfer
B
Two Party Ownership
C
Third-Party Ownership
D
Key Person Insurance

c

A partnership involving four equal partners is valued at $1,800,000. Under a Buy-Sell Agreement (Cross Purchase Plan), the amount of the policy on the life of each partner would be:
A
$900,000
B
$450,000
C
$150,000
D
$1,800,000

c

With a Contributory Group Life Plan, what percentage of the employees must participate?
A
At least 50%
B
At least 60%
C
A full 100%
D
At least 75%

d

The Social Security blackout period for surviving spouses begins when the youngest child reaches age ______, and ends when the surviving spouse reaches age ______.
A
16/60
B
16/62
C
18/65
D
18/60

a

Who are the parties in a third-party life insurance ownership situation?
A
The policyowner, the insured, and the beneficiary
B
The insured, the insurer, and the beneficiary
C
The policyowner, the insured, and the insurer
D
The policyowner, the insurer, an

C

Individuals who do not enroll during the initial enrollment period are considered ___________ enrollees.
A
Terminated
B
Late
C
Restricted
D
Prohibited

b

All of the following are correct regarding Key Person Insurance, except:
A
The policy is source of funds to replace any lost revenue
B
The policy primarily insures the employee's retirement plan
C
The policy can be term or permanent
D
The policy is owned

b

The widow or widower's Social Security blackout period lasts until a surviving, non-remarried spouse reaches age ________.
A
50
B
60
C
65
D
62

b

Buy-Sell agreements are used for all of the following entities, except:
A
Sole Proprietorships
B
Large Public Corporations
C
Closely held businesses
D
Partnerships

b

When an underwriter evaluates the risks presented with a particular group life application, which of the following is considered the most important?
A
The plan sponsor's credit rating
B
The sales volume of the employer
C
The overall health of the group
D

d

Proceeds from a buy-sell agreement are received ___________.
A
Income tax free
B
Taxable as income
C
Only after the deceased's estate is settled and a proper valuation of their share of the business
D
Taxed to the extent that the amount exceeds $50,000

a

The Social Security Death Benefit is payable to the ____________.
A
The named beneficiary
B
The estate of the insured
C
The next of kin
D
The surviving spouse

d

A key person is typically all of the following, except:
A
Part of the management team
B
More highly paid
C
Not directly involved in sales, production, or service
D
Respected by customers, creditors, suppliers, or vendors

c

Which of the following is NOT an example of Third-Party Ownership?
A
A business owner buying a life policy on his own life
B
A parent purchasing a policy on the life of his or her child
C
A Key Employee Policy
D
A policy used to fund a Buy-Sell Agreement

a

An individual can make changes to their group life insurance plan at any time for any one of the following reasons, except:
A
Change in employment status such as going to or from part-time to full-time
B
Getting married
C
Adding an eligible dependent
D
Ch

d

In which market are Certificates of Insurance issued to insured individuals?
A
Individual
B
Franchise
C
Industrial
D
Group

d

What is the minimum requirement for currently insured status under the Social Security system?
A
Earned more than minimum wage
B
Have not had a previous Social Security claim
C
Have 40 quarters of covered employment
D
At least 6 credits earned in the 13 c

d

What is the most important thing a buy-sell agreement establishes in the agreement?
A
The price of the business
B
The dollar amount of the premium
C
The amount of taxes owed
D
The insurance company issuing the coverage

a

Examples of third-party ownership include all of the following, except:
A
A life settlement
B
A viatical settlement
C
An adjustable life policy bought by Sam on Sam
D
A buy-sell agreement

c

The arrangement under a Buy-Sell Agreement in which each party purchases insurance on the life of his/her partner(s) is called a:
A
Split-Dollar Plan
B
Entity Purchase Plan
C
Cross Purchase Plan
D
Deferred Compensation

c

When is an entity buy-sell agreement plan used?
A
When the entity buys life insurance on each of the owners
B
When insurability is an issue
C
When the entity needs an additional tax deduction
D
When the owners are not in the financial position to buy the

a

To be considered fully insured under Social Security, a worker generally needs how many work credits?
A
80
B
10
C
40
D
20

c

If enrolled in an accredited elementary or secondary school, a covered child can continue receiving Survivor Benefits up to what age?
A
21
B
17
C
19
D
20

c

The highest monthly Social Security retirement benefit would occur if started at age _______.
A
62
B
70
C
65
D
60

b