Question 1. Once a policy is classified as a modified endowment contract, with certain corrections, it can be later treated as not a modified endowment contract.
True
False
Question 2. Because of the way that it is taxed, a modified endowment contract is not considered a life insurance policy for tax purposes.
True
False
Question 3. A modified endowment contract is a life insurance policy that has failed
the test for life insurance
the seven-pay test
the transfer for value rule
the rule against perpetuities
Question 4. A policy received in a 1035 exchange has an investment in the contract in the amount of the fair market value of the old policy.
True
False
Question 5. Which of the following would NOT be a valid exchange under Section 1035?
A life insurance contract for an annuity contract.
An endowment contract for an annuity contract.
After 2009, an annuity contract for a life insurance contract.
After 2009, a life insurance contract for a qualified long-term care contract.