WMCP UPDATED ACTUAL QUESTIONS AND CORRECT
ANSWERS
Question:
1. marginal utility
Answer:
The amount of additional satisfaction that is received by an increase in consumption. Satisfaction derived
from CONSUMING goods or services
Question:
2. Life insurance
Answer:
provides a payout that meets the bequest/legacy goal even if the individual dies before he or she saves
enough to fund a bequest/legacy
Question:
3. unexpected inheritance
Answer:
like pension income, this increase permanent income and reduce the savings needed before retirement
Question:
4. market risk to the value of human capital
Answer:
working in an occupation whose profits are closely tied to interest rates
Question:
5. Coverdell Education Savings Account
Answer:
an education savings fun that is subject to adjusted gross income (AGI)
Question:
6. 529 College Savings Plan
Answer:
No AGI restrictions so utilized by high income individuals for college savings
Question:
7. Traditional IRA
Answer:
An IRA for which you can deduct your contribution each year from your taxable income
Question:
8. Average rate of taxation
Answer:
the percentage of federal income taxes owed divided by taxable income
, Question:
9. appreciated property
Answer:
should be distributed through an estate rather than gifted
Question:
10. Step-up basis at death
Answer:
assets transferred at death get a new basis, tax free
Question:
11. Federal Gift Tax
Answer:
Federal tax imposed on the transfer of securities, property or other assets. The DONOR must pay the tax
based on the fair market value of the transferred assets. However, federal law allows donors to give up to
$12,000 per year to any individual without incurring gift tax liability. So, a husband and wife may give
$24,000 to their child in one year without tax if each parent gives $12,000.
Question:
12. Federal Estate Tax
Answer:
A tax imposed on the transfer of property at death. Assessed on the FMV of the property at the date of
death aka alternate valuation date
Question:
13. Charitable gifts
Answer:
Gifts to qualified organizations Cash or property Allows donor to take an income tax deduction
Question:
14. Shadow Account
Answer:
universal life policy with a secondary guarantee will remain in force even if the account value is less than
zero
Question:
15. permanent life insurance
Answer:
insurance that gives a person protection for his or her entire lifetime and tax benefits
Question:
16. Term Insurance
Answer:
life insurance protection for a specified period of time; sometimes called temporary life insurance
Question:
17. Term insurance is appropriate when:
ANSWERS
Question:
1. marginal utility
Answer:
The amount of additional satisfaction that is received by an increase in consumption. Satisfaction derived
from CONSUMING goods or services
Question:
2. Life insurance
Answer:
provides a payout that meets the bequest/legacy goal even if the individual dies before he or she saves
enough to fund a bequest/legacy
Question:
3. unexpected inheritance
Answer:
like pension income, this increase permanent income and reduce the savings needed before retirement
Question:
4. market risk to the value of human capital
Answer:
working in an occupation whose profits are closely tied to interest rates
Question:
5. Coverdell Education Savings Account
Answer:
an education savings fun that is subject to adjusted gross income (AGI)
Question:
6. 529 College Savings Plan
Answer:
No AGI restrictions so utilized by high income individuals for college savings
Question:
7. Traditional IRA
Answer:
An IRA for which you can deduct your contribution each year from your taxable income
Question:
8. Average rate of taxation
Answer:
the percentage of federal income taxes owed divided by taxable income
, Question:
9. appreciated property
Answer:
should be distributed through an estate rather than gifted
Question:
10. Step-up basis at death
Answer:
assets transferred at death get a new basis, tax free
Question:
11. Federal Gift Tax
Answer:
Federal tax imposed on the transfer of securities, property or other assets. The DONOR must pay the tax
based on the fair market value of the transferred assets. However, federal law allows donors to give up to
$12,000 per year to any individual without incurring gift tax liability. So, a husband and wife may give
$24,000 to their child in one year without tax if each parent gives $12,000.
Question:
12. Federal Estate Tax
Answer:
A tax imposed on the transfer of property at death. Assessed on the FMV of the property at the date of
death aka alternate valuation date
Question:
13. Charitable gifts
Answer:
Gifts to qualified organizations Cash or property Allows donor to take an income tax deduction
Question:
14. Shadow Account
Answer:
universal life policy with a secondary guarantee will remain in force even if the account value is less than
zero
Question:
15. permanent life insurance
Answer:
insurance that gives a person protection for his or her entire lifetime and tax benefits
Question:
16. Term Insurance
Answer:
life insurance protection for a specified period of time; sometimes called temporary life insurance
Question:
17. Term insurance is appropriate when:
