CT LIfe and Health Insurance Exam Chapter 4
Chapter 4 Quiz questions and definitions
Terms in this set (14)
Not Tax Deductible
Premiums paid on individual forms of life insurance.
Interest paid on life insurance proceeds
This is income taxable as ordinary income.
Federal Estate Taxes
Death taxes assessed by the government upon the assets of a decedent are known as this.
Federal and state death taxes must be paid within this amount of time following the decedent's death.,
Can not revert back
If a life insurance policy becomes modified endowment contract, it may revert back to an ordinary life policy with in?
Seven pay test
Was designed to reduce or prevent the purchase of whole life insurance for the purpose of short term investment gain.
The accumulation period
An annuity grows tax deferred during this time.
When the annuity phase commences, each payment made is comprised of a non taxable return of principal and a taxable return of this
Taxable as ordinary income
IF an annuity contract owner dies during the pay in phase and prior to the pay out phase, the beneficiary will receive the greater of the accumulated value of the annuity or the amount of contributions. Any amount received in excess of premium paid is:
Allows for the tax free swap of life insurance policies.
Death benefit paid to a beneficiary
This is not taxable at any point to a Modified Endowment Contract MEC, these are, Cash distribution, Surrender value, and policy loans
A Modified Endowment Contract is a permanent insurance policy whose premiums paid for it are not in proportion to its death benefit. Each of the following distributions will be subject to taxation in a modified endowment contract except for this.
Cash may be withdrawn prior to age 59 1/2 subject to penalty
Mike has a whole life policy that has been designed as a modified endowment contract. This is true regarding the contract.
They involve a single premium paid up additions
This is true regarding modified endowment contract rules.