Insurance MCQ

A general type of annuity is a combination plan. Combination plans combine features of A. Fixed-dollar and variable annuities. B. Deferred and immediate annuities. C. Flexible-premium and single-premium annuities. D. Life insurance and equity indexed annuities. Answer: A

Which one of the following is true regarding a Roth IRA? A. Annual contribution limits are higher than they are for a traditional IRA. B. Annual contribution limits are lower than they are for a traditional IRA. C. There are no required distributions during the lifetime of a Roth IRA. D. The account holder is able to deduct contributions for income-tax purposes. Answer: C

Defined benefit pension plans A. Define an employee contribution rate. B. Define an employer contribution rate. C. Generally are the most risky type of qualified employer-sponsored retirement plan for employees. D. Generally require no contributions by employees. Answer: D

Which one of the following statements about Social Security survivors benefits is true? A. Survivors benefit are exempt from the family maximum that applies to other Social Security benefits. B. Children are eligible for benefits up to age twenty-two if they are in college. C. A surviving spouse receives benefits only if he or she is at least age sixty-five. D. Dependent parents age sixty-two or older can receive benefits. Answer: D

Arthur has decided to continue working full-time past his full Social Security retirement age of sixty-six. He is aware that by postponing receipt of his Social Security retirement benefit, which he does not currently need, he can receive a significantly larger benefit later. After what age will his benefits no longer increase because of such a postponement? A. Sixty-eight B. Seventy C. Seventy-two D. Seventy-five Answer: B

The risk associated with the overall price levels in the economy is known as A. Market risk. B. Interest-rate risk. C. Purchasing power risk D. Business risk. Answer: C

Under a defined contribution plan, the employer's A. Contributions vary depending on the amount needed to fund the benefit. B. Contributions do not change. C. Contribution rate is defined, and the retirement benefit is defined. D. Contribution rate is defined, but the retirement benefit is variable. Answer: D

A retirement plan in which the employer contributes to an IRA established for each eligible employee, with annual contribution limits substantially higher than those allowed for traditional IRAs, describes a A. Simplified Employee Pension (SEP) plan. B. Section 403(b) plan. C. Profit-sharing plan. D. Section 401(k) plan. Answer: A

Which one of the following statements about Roth IRAs is true? A. Eligibility to invest in them is limited to persons under age 55. B. The tax penalty for early withdrawal may be waived if the owner becomes disabled. C. Contribution limits increase as an owner's income increases. D. Distributions must start before an owner reaches age 67. Answer: B

An investment risk associated with fluctuations in prices of financial securities, such as stocks and bonds is A. Inflation risk. B. Market risk. C. Financial risk. D. Interest rate risk. Answer: B

Larry is age 50 and already fully insured under Social Security. What is the earliest age he can retire and elect to start receiving retirement benefits? A. Fifty-five B. Fifty-nine and one-half C. Sixty-two. D. Sixty-six Answer: C

Which one of the following is a qualified plan that allows self-employed individuals to make tax deductible contributions to a retirement plan? A. 401(k) plan B. Thrift plan C. Simplified Employee Pension plan D. Keogh plan Answer: D

Preservation of capital is A. The ability to quickly convert an investment into cash with a minimal loss of principal. B. Managing investments to reduce the variability of investment outcomes. C. The objective of selecting assets that have a low risk of losing value. D. An increase in the value of investments. Answer: C

The risk associated with the nature of the industry in which the issuer of an investment operates and the management of the issuer itself is known as A. Business risk. B. Financial risk. C. Liquidity risk. D. Market risk. Answer: A

Which one of the following statements about Social Security survivors benefits is true? A. Survivors benefit are exempt from the family maximum that applies to other Social Security benefits. B. Children are eligible for benefits up to age twenty-two if they are in college. C. A surviving spouse receives benefits only if he or she is at least age sixty-five. D. Dependent parents age sixty-two or older can receive benefits. Answer: D

Which one of the following is true regarding a Roth IRA? A. Annual contribution limits are higher than they are for a traditional IRA. B. Annual contribution limits are lower than they are for a traditional IRA. C. There are no required distributions during the lifetime of a Roth IRA. D. The account holder is able to deduct contributions for income-tax purposes. Answer: C

Defined benefit pension plans A. Define an employee contribution rate. B. Define an employer contribution rate. C. Generally are the most risky type of qualified employer-sponsored retirement plan for employees. D. Generally require no contributions by employees. Answer: D

Which one of the following is a combination of a defined benefit plan and a defined contribution plan? A. Annuity B. Combination defined contribution plan C. Defined benefit 401(k) plan D. Define contribution Keogh plan Answer: C