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Question 1 of 10
1. Question
What determines the limits on the amount to be deducted as premium in long term care policy?
Correct
There are some excellent tax benefits of qualified long-term care contracts. For one thing, individuals are allowed to deduct a premium paid for long-term care in excess of 7.5% of adjusted gross income. The individual’s age determines limits on the amount that can be deducted.
Incorrect
There are some excellent tax benefits of qualified long-term care contracts. For one thing, individuals are allowed to deduct a premium paid for long-term care in excess of 7.5% of adjusted gross income. The individual’s age determines limits on the amount that can be deducted.
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Question 2 of 10
2. Question
What are the circumstances in which the automobile insurance may not provide the coverage?
I. When the accident occurs during non-business use
II. When a person is living in the same house as the insured but is not listed on the policy
III. When the accident occurs during business use
IV. Accidents that occur after the driver has rejected insurance coverage through a rental company.Correct
There are three main circumstances in which automobile insurance may not provide coverage. One is when a person is living in the same house as the insured but is not listed on the policy. Another common event that may not be covered is when the accident occurs during business use. Finally, auto insurance may not cover accidents that occur after the driver has rejected insurance coverage through a rental company.
Incorrect
There are three main circumstances in which automobile insurance may not provide coverage. One is when a person is living in the same house as the insured but is not listed on the policy. Another common event that may not be covered is when the accident occurs during business use. Finally, auto insurance may not cover accidents that occur after the driver has rejected insurance coverage through a rental company.
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Question 3 of 10
3. Question
The type of insurance that never expires, has a cash value, and contains the advantage of a tax-deferred investment income is:
Correct
Permanent insurance, on the other hand, never expires, has a cash value, and contains the advantage of a tax-deferred investment income. The cash value of a permanent insurance policy is a kind of savings fund for the policyholder.
Incorrect
Permanent insurance, on the other hand, never expires, has a cash value, and contains the advantage of a tax-deferred investment income. The cash value of a permanent insurance policy is a kind of savings fund for the policyholder.
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Question 4 of 10
4. Question
In which type of life insurance policy, the policy owner is allowed to choose the investments to which the savings element will be directed?
Correct
In a variable life insurance policy, the policy owner is allowed to choose the investments to which the savings element will be directed. There is no guaranteed cash value or crediting rate in a policy of this kind. Investments will be held in separate accounts that resemble mutual funds but are classified as different.
Incorrect
In a variable life insurance policy, the policy owner is allowed to choose the investments to which the savings element will be directed. There is no guaranteed cash value or crediting rate in a policy of this kind. Investments will be held in separate accounts that resemble mutual funds but are classified as different.
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Question 5 of 10
5. Question
In which type of insurance policy, the death benefit will be equal to the cash value at maturity?
Correct
A less-common kind of life insurance policy is known as an endowment policy. In an endowment policy, the death benefit will be equal to the cash value at maturity. The purchaser of an endowment policy can specify the maturity date of the policy (these are usually terms of ten, fifteen, twenty, or more years). At age 100, the life insurance will be identical in design to an endowment, as cash value equals the death benefit.
Incorrect
A less-common kind of life insurance policy is known as an endowment policy. In an endowment policy, the death benefit will be equal to the cash value at maturity. The purchaser of an endowment policy can specify the maturity date of the policy (these are usually terms of ten, fifteen, twenty, or more years). At age 100, the life insurance will be identical in design to an endowment, as cash value equals the death benefit.
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Question 6 of 10
6. Question
Identify the different types of joint life policies:
I. First-to-die policy
II. Second-to-die policy
III. Third-to-die policy
IV. Family income policyCorrect
There are a few different kinds of joint-life policies. A first-to-die policy is usually made for the continuation of a business. The policy will insure all of the owners of the business, and when the first owner dies, the insurance company will make a payment that the other owners use to purchase the deceased’s share of the business. Second-to-die policies are more common in estate tax payment. A family income policy is a combination of decreasing term insurance and some form of whole life insurance.
Incorrect
There are a few different kinds of joint-life policies. A first-to-die policy is usually made for the continuation of a business. The policy will insure all of the owners of the business, and when the first owner dies, the insurance company will make a payment that the other owners use to purchase the deceased’s share of the business. Second-to-die policies are more common in estate tax payment. A family income policy is a combination of decreasing term insurance and some form of whole life insurance.
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Question 7 of 10
7. Question
What are the choices given to the owner who has the nonforfeiture option of a life insurance policy?
I. The owner may want to surrender for cash.
II. The owner may want to purchase an annuity to provide income for life or over a specified period.
III. The owner may want to buy a reduced amount of paid-up permanent.
IV. The owner may want to invest the same amount of extended term insurance.Correct
The nonforfeiture option of a life insurance policy gives the owner a few choices concerning how to use the policy’s cash value. The owner may want to surrender for cash; that is, withdraw the cash value of the policy. Or, the owner may want to purchase an annuity to provide income for life or over a specified period. Additionally, the owner may want to buy a reduced amount of paid-up permanent insurance. This gives the owner a zero-premium policy of a reduced amount. Finally, the owner may want to buy the same amount of extended term insurance.
Incorrect
The nonforfeiture option of a life insurance policy gives the owner a few choices concerning how to use the policy’s cash value. The owner may want to surrender for cash; that is, withdraw the cash value of the policy. Or, the owner may want to purchase an annuity to provide income for life or over a specified period. Additionally, the owner may want to buy a reduced amount of paid-up permanent insurance. This gives the owner a zero-premium policy of a reduced amount. Finally, the owner may want to buy the same amount of extended term insurance.
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Question 8 of 10
8. Question
Under what situations a policy owner can change the policy?
I. If one has quit smoking
II. If the policy is performing well
III. If the policy is in financial trouble
IV. If one wants to replace a short-term policy with long-term policyCorrect
A policy owner may wish to terminate or change a policy for a number of reasons. This is often done if the insurance company that issued the policy is in financial trouble, or if the policy is performing poorly. One may want to replace a policy if one has quit smoking and is now eligible for a better premium. Sometimes, people replace a short-term policy with a long-term policy if they feel they can reduce cost.
Incorrect
A policy owner may wish to terminate or change a policy for a number of reasons. This is often done if the insurance company that issued the policy is in financial trouble, or if the policy is performing poorly. One may want to replace a policy if one has quit smoking and is now eligible for a better premium. Sometimes, people replace a short-term policy with a long-term policy if they feel they can reduce cost.
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Question 9 of 10
9. Question
Why is the key employee insurance taken out?
I. To save the tax from the business
II. To protect the business against the loss of business income
III. To ensure that the funds will be available to find a new key employee
IV. To ensure that the funds will be available to train the replacement of the key employeeCorrect
Key employee insurance is insurance taken out on a certain valuable employee. This insurance is owned by the business, which is also considered the beneficiary. The premiums in a policy of this type are not deductible to the business. Death benefits acquired through a policy of this type are tax-free. Generally, key employee insurance is taken out in order to protect the business against the loss of business income and also to ensure that funds will be available to find and train a replacement for the key employee.
Incorrect
Key employee insurance is insurance taken out on a certain valuable employee. This insurance is owned by the business, which is also considered the beneficiary. The premiums in a policy of this type are not deductible to the business. Death benefits acquired through a policy of this type are tax-free. Generally, key employee insurance is taken out in order to protect the business against the loss of business income and also to ensure that funds will be available to find and train a replacement for the key employee.
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Question 10 of 10
10. Question
What is the purpose of insurance?
I. To protect the existing assets
II. To protect the income
III. To minimise the liabilities
IV. To protect both the income and the assetsCorrect
The purpose of insurance is threefold: to protect existing assets; to protect income, so that it will not be interrupted by loss; and to protect both income and assets in the case of liabilities or emergency needs.
Incorrect
The purpose of insurance is threefold: to protect existing assets; to protect income, so that it will not be interrupted by loss; and to protect both income and assets in the case of liabilities or emergency needs.