Utah Life and Health Exam- Chapter 6 Practice Exam Questions And Guaranteed Pass Solutions.

Which of the following is true regarding taxation of dividends in participating policies? a- Dividends are taxable in some life insurance policies and nontaxable in others. b- Dividends are considered income for tax purposes. c- Dividends are not taxable. d- Dividends are taxable only after a certain amount is accumulated annually. - Answer c- Dividends are not taxable; Dividends are not considered to be income for tax purposes, since they are the return of unused premiums. The interest earned on the dividends, however, is subject to taxation as ordinary income. What is the tax consequence of amounts received from a Traditional IRA after the money was left in the tax-deferred account by the beneficiary? a- Capital gains tax on distributions plus 10% penalty. b- Income tax on distributions and no penalty. c- Income tax on distributions plus 10% penalty. d- Capital gains tax on distributions and no penalty. - Answer b- Income tax on distributions and no penalty; If the beneficiary chooses to leave the money in the tax-deferred account until the calendar year in which the owner would have attained age 70½, the distributions would be subject to income taxation at the rate at the time of withdrawal. Which type of retirement account allows contributions to continue beyond age 70 1/2 and does not force distributions to start at age 70 1/2? a- Roth IRA b- Flexible IRA c- Standard IRA d- Traditional IRA - Answer Roth IRA; A Roth IRA allows contributions to continue beyond age 70½ and does not force distributions to start at age 70½.