Carl and Carol Williams, a married couple, are doing some estate planning. Upon his death, Carl plans to leave $1,000,000 in property to his wife. This amount will reduce the value of Carl’s gross estate and will be taxed later when Carol dies. This reduction of the gross estate is called the A) unified tax […]
Date: September 19th, 2020
Actuaries at Term Life Insurance Company calculated the net single premium per thousand for a five-year term policy for a man age 32 to be $5.04. To calculate the net level premium for this policy, the net single premium should be A) divided by 5. B) divided by the future value life annuity due factor […]
Date: September 19th, 2020
Paul is shopping for a life insurance policy. An agent asked Paul if he would like to purchase a participating policy. What is a “participating” policy? A) a policy which has a cash value B) a policy which pays dividends C) a policy which invests in common stock D) a policy which provides for an […]
Date: September 19th, 2020
The net premiums collected by a life insurer for a particular block of policies, plus interest income at an assumed rate, less assumed death benefits paid is called the A) cash value. B) retrospective reserve. C) net amount at risk. D) prospective reserve. ANSWER Answer: B
Date: September 19th, 2020
All of the following statements about the income tax treatment of individually-purchased life insurance are true EXCEPT A) policyowner dividends are received tax-free. B) the annual increase in cash value is not taxable while the policy remains in force. C) premiums paid for individual life insurance are a tax deductible expense. D) life insurance proceeds […]
Date: September 19th, 2020
The average annual rate of return on a cash-value policy if it is held a specified number of years is called the policy’s A) net present value. B) interest-adjusted cost. C) benchmark cost. D) Linton yield. ANSWER Answer: D
Date: September 19th, 2020
Life insurance policy reserves A) are always equal to the policy’s cash surrender value. B) are a major asset of life insurance companies. C) are paid to the beneficiary when the insured dies. D) are a major liability of life insurance companies. ANSWER Answer: D
Date: September 19th, 2020
All of the following statements about the tax treatment of life insurance purchased by an individual are true EXCEPT A) The annual increase in the cash value is currently taxable. B) Premium payments are not tax deductible. C) Death benefits received in a lump sum are not taxable income. D) Policyowner dividends are not considered […]
Date: September 19th, 2020
Which of the following statements is (are) true about the federal estate tax? I. The gross estate can be reduced by a number of deductions. II. If the person who died had any ownership interest in a life insurance policy at the time of death, the proceeds are included in the gross estate for federal […]
Date: September 19th, 2020
The policy reserve at the end of any given policy year is called the A) terminal reserve. B) unearned premium reserve. C) mean reserve. D) initial reserve. ANSWER Answer: A
Date: September 19th, 2020
