Estate Planning Exam 5 Questions with Correct Answers Latest 2025-2026
Henry is a single businessman with inadequate liquidity to cover estate administrative expenses,
debts and taxes at his death. He plans to purchase a life insurance policy which provides a tax-
free investment and an immediate cash value. Which type of policy should Henry purchase? -
Answers Single premium whole life
Which type of life insurance policy permits the contract owner to choose the level of premium,
the death benefit amount and the duration of the premium-paying period? - Answers Universal
Life
Graham was the owner and the insured of a $3 million life insurance policy and his wife Karen
was the beneficiary. At Graham's death, Karen disclaimed all of the proceeds that subsequently
passed from his estate to a testamentary bypass trust. Which of the following statements is
correct? - Answers The $3 million death benefit is included in Graham's estate and the proceeds
do not qualify for a marital deduction.
Which statement describes the policy valuation for a gift or a bequest of a single-premium
policy? - Answers The value is the new issuance charge for a comparable contract of equal face
value.
Edie died last month owning a whole life insurance policy on her husband Rob's life. The death
benefit amount was $500,000 and the insurance company valued the policy at $80,000. Edie
was the beneficiary of the policy and her son Manny was the contingent owner. Which of the
following statements is correct? - Answers The amount included in Edie's gross estate and
probate estate is $80,000.
Connor had been the owner and beneficiary of a $1 million whole-life insurance policy on his
sister's life. Connor gifted the policy away four years ago to his nephew but kept the right to
borrow its cash value. If the policy was valued at $200,000 when Connor died, what amount
attributed to the policy was included in his gross estate? - Answers The $1 million death benefit
was included in Connor's estate because he retained an incident of ownership in the policy at
his death.
All of the statements regarding the taxation of insurance policies are correct, except: - Answers
When a single policy is gifted jointly to two children, the transfer qualifies for two annual
exclusions.
All of the following statements regarding liquidity planning for estates are correct, except: -
Answers Insurance proceeds in an ILIT are included in the insured's probate estate if they are
used to pay postmortem expenses.
Which statement regarding an ILIT is incorrect? - Answers The trust cannot hold a survivorship
policy when a husband and wife are co-insureds.
Henry is a single businessman with inadequate liquidity to cover estate administrative expenses,
debts and taxes at his death. He plans to purchase a life insurance policy which provides a tax-
free investment and an immediate cash value. Which type of policy should Henry purchase? -
Answers Single premium whole life
Which type of life insurance policy permits the contract owner to choose the level of premium,
the death benefit amount and the duration of the premium-paying period? - Answers Universal
Life
Graham was the owner and the insured of a $3 million life insurance policy and his wife Karen
was the beneficiary. At Graham's death, Karen disclaimed all of the proceeds that subsequently
passed from his estate to a testamentary bypass trust. Which of the following statements is
correct? - Answers The $3 million death benefit is included in Graham's estate and the proceeds
do not qualify for a marital deduction.
Which statement describes the policy valuation for a gift or a bequest of a single-premium
policy? - Answers The value is the new issuance charge for a comparable contract of equal face
value.
Edie died last month owning a whole life insurance policy on her husband Rob's life. The death
benefit amount was $500,000 and the insurance company valued the policy at $80,000. Edie
was the beneficiary of the policy and her son Manny was the contingent owner. Which of the
following statements is correct? - Answers The amount included in Edie's gross estate and
probate estate is $80,000.
Connor had been the owner and beneficiary of a $1 million whole-life insurance policy on his
sister's life. Connor gifted the policy away four years ago to his nephew but kept the right to
borrow its cash value. If the policy was valued at $200,000 when Connor died, what amount
attributed to the policy was included in his gross estate? - Answers The $1 million death benefit
was included in Connor's estate because he retained an incident of ownership in the policy at
his death.
All of the statements regarding the taxation of insurance policies are correct, except: - Answers
When a single policy is gifted jointly to two children, the transfer qualifies for two annual
exclusions.
All of the following statements regarding liquidity planning for estates are correct, except: -
Answers Insurance proceeds in an ILIT are included in the insured's probate estate if they are
used to pay postmortem expenses.
Which statement regarding an ILIT is incorrect? - Answers The trust cannot hold a survivorship
policy when a husband and wife are co-insureds.
