1. $100,000 death benefit is paid to the beneficiary, age 50, under pure life income (i.e. life annuity) option and the payment is $4000 per year. Based on IRS mortality table, the life expectance of 50 old is 35 years, then how much of each the payment is taxable income of the beneficiary?
A- $4000
B- $500
c- $ 2857
d- $1143
2. Which of the following living proceeds from life and health insurance is free from income tax? (1) Accelerated death benefits; (2) surrender value ; (3) Benefits from health insurance;(4) Benefits from LTC insurance that lower than the per diem limitation.
A- (3) AND (4) ONLY
B- (1) and (3) only
c- (1), (3), and (4)
d- (1), (2), (3), and (4)
3. Rebecca’s $100,000 ordinary life policy, issued 20 years ago, carries an annual premium of $ 1,300 and has a cash surrender value of $30,000. The sum of all dividends over the 20 year period is $10,000. If she surrendered the policy, how much the amount subject to ordinary income tax?
A- $23,000
B- $26,000
c- $16,000
d- $14,000
4. Under which of the following circumstance the death benefit is not included in the insured’s gross estate?
a- Mom purchased life insurance on dad, and named the kids as beneficiaries
b- Mom purchased life insurance on herself and named the kids as beneficiaries
c- Mom purchased life insurance on herself and didn’t name anyone as beneficiaries
d- If all of the above should be included in the insured’s gross estate, please choose D.
5. Domestic insurers are those that are incorporated under the laws of USA and the foreign insurers are those that are incorporated under the laws of foreign countries.
A- True
B- False
6. The following ratios provide measurement of insurer’s surplus adequatcy, except:
A- Surplus adequacy ratio
B- Rate of Surplus formation
C- Surplus relief ratio
D- De- liability- to Surplus