CRPC PRACTICE MODULE 4 EXAM WITH QUESTIONS AND CORRECT VERIFIED
ANSWERS WITH RATIONALE |ALREADY GRADED A+
Whole life policies feature
-level premiums and a flexible death benefit.
-flexible premiums and a level death benefit.
-level premiums and a level death benefit for a specific time period.
-level premiums and a level death benefit for the insured's entire life. - (ANSWER)level
premiums and a level death benefit for the insured's entire life.
#$
Whole life policies are designed to provide for level premiums, a guaranteed death benefit %
no matter when the insured dies, and guaranteed cash value. ^
&*
Flexibility is the key word that describes ()_
+
whole life.
variable life.
term life.
universal life. - (ANSWER)universal life.
The key word for term life is low-cost (relative to other options). The key word for whole life
is guaranteed. For variable life, the key term is variable. Universal life offers a significant
degree of flexibility.
Sam, age 62, retired two years ago and is currently relying on his Social Security retirement
benefit for income. Faced with a tight budget, Sam is considering going back to work.
Which one of the following would not be true if he returned to work?
-He may be eligible for employer-paid health care coverage.
-Regardless of the income he earns, he will continue to receive his full Social Security
benefit.
-When he fully retires he will have fewer years of retirement to finance.
-He could establish and fund an IRA with his earned income. - (ANSWER)Regardless of the
income he earns, he will continue to receive his full Social Security benefit.
Old-age benefits of Social Security recipients may be reduced if the client earns income
from wages and salary during retirement prior to Social Security's full retirement age.
Benefits paid to persons in the years prior to attaining full retirement age are reduced by $1
for every $2 earned over the limit.
,CRPC PRACTICE MODULE 4 EXAM WITH QUESTIONS AND CORRECT VERIFIED
ANSWERS WITH RATIONALE |ALREADY GRADED A+
Earned income, as defined by the Internal Revenue Code, includes all of the following
except
alimony.
salary.
bonuses.
Social Security income. - (ANSWER)Social Security income.
Earned income only includes salary, fees, bonuses, commissions, and taxable alimony.
#$
An individual is not considered an "active participant" in an employer-sponsored defined %
contribution plan if they receive only which one of the following annual additions? ^
&*
interest ()_
employee contributions +
forfeitures - (ANSWER)interest
Only employee and employer contributions and forfeitures result in active participant
status. Investment earnings credited to an individual's account do not.
Jane Pascheon has contributed $1,000 each year to a Roth IRA, beginning with an initial
payment of $500 on December 31, 2014. At which date will she meet the requirement that
qualifies her for tax-free distributions of gains in her account? - (ANSWER)January 1, 2019
A Roth IRA owner is required to hold the account for a minimum of five years to qualify for
tax-free distributions, starting on January 1st of the year the first contribution is made. The
clock started on January 1, 2014, so five years will have elapsed on January 1, 2019. In
addition, the owner must be at least age 59½.
All of the following are true regarding Roth 401(k)s except
if an individual starts contributing to a Roth 401(k) and has an existing Roth IRA, each
account will have its own separate five-year clock.
required minimum distributions apply.
the regular deferral limit is $19,000 in 2019.
a $1,000 catch-up provision is available to individuals age 50 and older. - (ANSWER)a
$1,000 catch-up provision is available to individuals age 50 and older.
In 2019, participants age 50 and older can contribute an additional $6,000 as a catch-up
provision; this is in addition to the regular deferral limit of $19,000.
, CRPC PRACTICE MODULE 4 EXAM WITH QUESTIONS AND CORRECT VERIFIED
ANSWERS WITH RATIONALE |ALREADY GRADED A+
Which one of the following statements applies to fixed annuities?
Their objective is to outpace inflation.
The premiums are invested in the company's general account.
A rider can be added so that the value at death is guaranteed to be at least equal to the
amount of the premium investment.
#$
Premium contributions purchase units of separate accounts. - (ANSWER)The premiums
are invested in the company's general account. %
^
The premiums in a fixed annuity are invested in the company's general account. The other &*
statements are applicable to variable annuities. ()_
+
Sara is ready to annuitize her contract. She would like to receive the largest lifetime
monthly income possible. Which one of the following income options should she select?
single life annuity
fixed period annuity
life income with refund
pension maximization - (ANSWER)single life annuity
A single-life annuity will provide the largest lifetime monthly income. Pension maximization
is a strategy using a pure life annuity, but is not an income option per se.
Mark, age 54, funded a nonqualified annuity with a $1,000 deposit. His annuity is now
worth $2,500. He would like to make a $500 withdrawal. How will this distribution be taxed?
- (ANSWER)It will be fully taxable and subject to an early withdrawal penalty.
Lump sum distributions from an annuity are fully taxable until all earnings have been
distributed; this is referred to as last-in, first-out. Because Mark is under age 59½, his
distribution will be subject to a 10% early withdrawal penalty. If the contract were
annuitized, payments would be taxed on a pro rata basis.
All of the following are correct about the surrender charges associated with an annuity,
except
-a typical surrender charge period is four to nine years.
-surrender charges are a way for the insurance company to recoup expenses associated
with the establishment of the contract.
ANSWERS WITH RATIONALE |ALREADY GRADED A+
Whole life policies feature
-level premiums and a flexible death benefit.
-flexible premiums and a level death benefit.
-level premiums and a level death benefit for a specific time period.
-level premiums and a level death benefit for the insured's entire life. - (ANSWER)level
premiums and a level death benefit for the insured's entire life.
#$
Whole life policies are designed to provide for level premiums, a guaranteed death benefit %
no matter when the insured dies, and guaranteed cash value. ^
&*
Flexibility is the key word that describes ()_
+
whole life.
variable life.
term life.
universal life. - (ANSWER)universal life.
The key word for term life is low-cost (relative to other options). The key word for whole life
is guaranteed. For variable life, the key term is variable. Universal life offers a significant
degree of flexibility.
Sam, age 62, retired two years ago and is currently relying on his Social Security retirement
benefit for income. Faced with a tight budget, Sam is considering going back to work.
Which one of the following would not be true if he returned to work?
-He may be eligible for employer-paid health care coverage.
-Regardless of the income he earns, he will continue to receive his full Social Security
benefit.
-When he fully retires he will have fewer years of retirement to finance.
-He could establish and fund an IRA with his earned income. - (ANSWER)Regardless of the
income he earns, he will continue to receive his full Social Security benefit.
Old-age benefits of Social Security recipients may be reduced if the client earns income
from wages and salary during retirement prior to Social Security's full retirement age.
Benefits paid to persons in the years prior to attaining full retirement age are reduced by $1
for every $2 earned over the limit.
,CRPC PRACTICE MODULE 4 EXAM WITH QUESTIONS AND CORRECT VERIFIED
ANSWERS WITH RATIONALE |ALREADY GRADED A+
Earned income, as defined by the Internal Revenue Code, includes all of the following
except
alimony.
salary.
bonuses.
Social Security income. - (ANSWER)Social Security income.
Earned income only includes salary, fees, bonuses, commissions, and taxable alimony.
#$
An individual is not considered an "active participant" in an employer-sponsored defined %
contribution plan if they receive only which one of the following annual additions? ^
&*
interest ()_
employee contributions +
forfeitures - (ANSWER)interest
Only employee and employer contributions and forfeitures result in active participant
status. Investment earnings credited to an individual's account do not.
Jane Pascheon has contributed $1,000 each year to a Roth IRA, beginning with an initial
payment of $500 on December 31, 2014. At which date will she meet the requirement that
qualifies her for tax-free distributions of gains in her account? - (ANSWER)January 1, 2019
A Roth IRA owner is required to hold the account for a minimum of five years to qualify for
tax-free distributions, starting on January 1st of the year the first contribution is made. The
clock started on January 1, 2014, so five years will have elapsed on January 1, 2019. In
addition, the owner must be at least age 59½.
All of the following are true regarding Roth 401(k)s except
if an individual starts contributing to a Roth 401(k) and has an existing Roth IRA, each
account will have its own separate five-year clock.
required minimum distributions apply.
the regular deferral limit is $19,000 in 2019.
a $1,000 catch-up provision is available to individuals age 50 and older. - (ANSWER)a
$1,000 catch-up provision is available to individuals age 50 and older.
In 2019, participants age 50 and older can contribute an additional $6,000 as a catch-up
provision; this is in addition to the regular deferral limit of $19,000.
, CRPC PRACTICE MODULE 4 EXAM WITH QUESTIONS AND CORRECT VERIFIED
ANSWERS WITH RATIONALE |ALREADY GRADED A+
Which one of the following statements applies to fixed annuities?
Their objective is to outpace inflation.
The premiums are invested in the company's general account.
A rider can be added so that the value at death is guaranteed to be at least equal to the
amount of the premium investment.
#$
Premium contributions purchase units of separate accounts. - (ANSWER)The premiums
are invested in the company's general account. %
^
The premiums in a fixed annuity are invested in the company's general account. The other &*
statements are applicable to variable annuities. ()_
+
Sara is ready to annuitize her contract. She would like to receive the largest lifetime
monthly income possible. Which one of the following income options should she select?
single life annuity
fixed period annuity
life income with refund
pension maximization - (ANSWER)single life annuity
A single-life annuity will provide the largest lifetime monthly income. Pension maximization
is a strategy using a pure life annuity, but is not an income option per se.
Mark, age 54, funded a nonqualified annuity with a $1,000 deposit. His annuity is now
worth $2,500. He would like to make a $500 withdrawal. How will this distribution be taxed?
- (ANSWER)It will be fully taxable and subject to an early withdrawal penalty.
Lump sum distributions from an annuity are fully taxable until all earnings have been
distributed; this is referred to as last-in, first-out. Because Mark is under age 59½, his
distribution will be subject to a 10% early withdrawal penalty. If the contract were
annuitized, payments would be taxed on a pro rata basis.
All of the following are correct about the surrender charges associated with an annuity,
except
-a typical surrender charge period is four to nine years.
-surrender charges are a way for the insurance company to recoup expenses associated
with the establishment of the contract.
