Insurance MCQ

A claimant, who is totally and permanently disabled, is eligible for Social Security Disability benefits after an elimination period of A. 12 months B. 24 months C. 0 months D. 5 months Answer: D. 5 months

The minimum number of credits for partially insured status for Social Security disability benefits is A. 4 credits B. 6 credits C. 10 credits D. 40 credits Answer: B. 6 credits

All of the following are requirements of eligibility for Social Security disability income benefits EXCEPT A. Fully insured status B. Waiting period of 5 months C. Being age 65 D. Inability to perform any gainful work Answer: C. Being age 65

Which concept is associated with "exclusion ratio"? A. How exclusion riders affect an insurance premium B. Policy provisions C. Annuities payments D. Dividend distribution Answer: C. Annuities payments

An insurer decides to surrender his $100,000 Whole Life policy. The premiums paid into the policy added up to $15,000. At policy surrender, the cash surrender value was $18,000. What part of the surrender value would be income taxable? A. $50,000 B. $18,000 C. $15,000 D. $3,000 Answer: D. $3,000

Who can make a fully deductible contribution to a traditional IRA? A. Someone making contributions to an education IRA B. A person whose contributions are funded by a return on investment C. An individual not covered by an employer-sponsored plan who has earned income D. Anybody: all IRA contributions are fully deductible regardless of income level Answer: C. An individual not covered by an employer-sponsored plan who has earned income

If an annuitant dies during the accumulation period, what benefit (if any) will be included in the annuitant's estate? A. Accumulated cash value B. Full annuity benefit C. No benefits D. Policy loans Answer: A. Accumulated cash value

Which of the following best describes taxation during the accumulation period of the annuity? A. The annuity is subject to state taxes only B. The annuity is subject to both state and federal taxation C. The growth is subject to immediate taxation D. Taxes are deferred Answer: D. Taxes are deferred

What is the penalty for IRA distributions that are below the required minimum for the year? A. 10% B. 25% C. 50% D. 60% Answer: C. 50%

All of the following benefits are available under Social Security EXCEPT A. Death benefits B. Welfare benefits C. Old-age and retirement benefits D. Disability benefits Answer: B. Welfare benefits

If an insured surrenders his life insurance policy, which statement is true regarding the cash value of the policy? A. It is only taxable if the cash value exceeds the amount paid for premiums B. It is not considered to be taxable C. It is taxable only if it exceeds the amounts paid for premiums by 50% D. It is automatically taxable Answer: A. it is only taxable if the cash value exceeds the amount paid for premiums

What is the purpose of the Seven-pay test? A. It requires level premium payments for 7 years B. It ensures that the policy benefits are paid out in 7 years C. It guarantees the minimum interest D. It determines if the insurance policy is a MEC Answer: D. It determines if the insurance policy is a MEC

Which of the following is NOT an allowable 1035 exchange? A. A whole life insurance policy is exchanged for a term insurance policy B. A whole life insurance policy is exchanged for a Universal life insurance policy C. An annuity is exchanged for another annuity D. A life insurance policy is exchanged for an annuity Answer: A. A whole life insurance policy is exchanged for a term insurance policy

Which of the following is used to determine the annuity amounts that are not taxable? A. Market-adjusted annuities index B. Exclusion ratio C. Pro rate ratio D. Exclusion index Answer: B. Exclusion ratio

If a life insurance policy develops cash value faster than a seven-pay whole life contract, it becomes a/an A. Endowment B. Nonqualified annuity C. Modified endowment contract D. Accelerated benefit policy Answer: C. Modified endowment contract

When the owner of a $250,000 life insurance policy died, the beneficiary decided to leave the proceeds of the policy with the insurance company and selected the Interest Settlement Option. If at the time of withdrawal the interest paid was $11,000, the beneficiary would be required to pay income tax on A. $239,000 B. $11,000 C. None, because the beneficiary has not received the death benefit D. $261,000 Answer: $11,000

If $100,000 of life insurance proceeds were used in a settlement option, which paid $13,000 per year for ten years, which of the following would be taxable annually? A. $3,000 B. $13,000 C. $10,000 D. $7,000 Answer: A. $3,000

What is the number of credits required for fully insured status for Social Security benefits? A. 4 B. 10 C. 30 D. 40 Answer: D. 40

Death benefits payable to a beneficiary under a life insurance policy are generally A. Subject to income taxation by the Federal Government B. Exempt from income taxation if under $10,000 C. Exempt from income taxation if over $10,000 D. Not subject to income taxation by the Federal Government Answer: D. Not subject to income taxation by the Federal Government

An applicant buys a non qualified annuity, but dies before the starting date. For which of the following beneficiaries would the interest accumulated in the annuity NOT be taxable? A. Charitable organization B. Dependents C. Annuitant D. Spouse Answer: D. Spouse