AD BANKER COMPREHENSIVE EXAM
2025
AD BANKER COMPREHENSIVE EXAM
2025/2026 COMPLETE verifies
QUESTIONS AND CORRECT ANSWERS
|ALREADY GRADED A+||BRAND NEW!!
To be considered terminally ill, federal law defines a terminal illness as one which is expected to
result in the person's death within how many months?
A
36
B
24
C
12
D
6
B
24
Federal law establishes 24 months as a person's maximum life expectancy to be defined as terminally
ill. For the activation of an accelerated death benefit rider, and for the purpose of limiting such
claims, insurance companies often define terminal illness as one which would result in death within
12 months.
Which of the following distributions in a life insurance policy is taxable?
A
Withdrawal of cost basis
B
Interest paid on a death benefit settlement option
A+ TEST BANK 1
, AD BANKER COMPREHENSIVE EXAM
2025
C
Cash dividend from a participating policy
D
Policy loans
B
Interest paid on a death benefit settlement option
Policy loans, cash dividends, and withdrawal of cost basis are not subject to taxation. Interest paid as
part of a death benefit settlement option is taxed as ordinary income.
When may an employer deduct the premiums it pays for an employee's life insurance benefit?
A
An employer cannot ever deduct premiums it pays for an employee's life insurance benefit
B
As long as the business does not derive a direct benefit from the policy
C
Employers can always deduct the premiums it pays for an employee's life insurance benefit
D
If the business does not receive more than 50% of the death benefit
B
As long as the business does not derive a direct benefit from the policy
As long as the insurance death benefit is not payable to the employer when an employee dies, the
premiums paid for the life insurance are deductible to the business.
All of the following statements regarding a Modified Endowment Contract are correct, EXCEPT:
A
Distributions on gains withdrawn from a MEC prior to age 59 1/2 are subject to a 10% penalty in
addition to taxation
B
If a policy is deemed a MEC, the owner has 7 years to receive a refund of excess premiums and
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, AD BANKER COMPREHENSIVE EXAM
2025
remove the MEC status
C
Distributions received from a MEC are subject to a LIFO tax treatment
D
A policy that fails the 7-pay test will be deemed a MEC
B
If a policy is deemed a MEC, the owner has 7 years to receive a refund of excess premiums and
remove the MEC status
A policy that does not pass the 7-Pay Test will be deemed a Modified Endowment Contract for the
life of the contract.
All of the following tax-free exchanges of life insurance and annuities are permitted, EXCEPT:
A
Annuity to long term care insurance
B
Life insurance to an annuity
C
Annuity to life insurance
D
Life insurance to long term care insurance
C
Annuity to life insurance
Annuities may not be exchanged for life insurance.
All of the following are characteristics of a qualified retirement plan, EXCEPT:
A
Employer contributions are immediately tax deductible to the employer
B
Employee contributions are either pretax or tax deductible
A+ TEST BANK 3
, AD BANKER COMPREHENSIVE EXAM
2025
C
Employers in private industry are required to establish pension plans
D
The penalty for premature distributions may be waived for death, disability, qualified education
costs, medical expenses and first -time homebuyers
C
Employers in private industry are required to establish pension plans
Qualified retirement plans receive favorable tax treatment, such as deductible premiums to the
employer, pretax or deductible premiums to the employee, and waived penalties for the listed
situations. ERISA is a federal law that sets minimum standards for employers who establish pension
plans in private industry, but does not require employers to establish a plan.
A Roth IRA is unique for which of the following reasons?
A
Contributions are tax deductible and distributions are nontaxable
B
Contributions are nondeductible and distributions are nontaxable
C
Contributions are nondeductible and distributions are taxable
D
Contributions are tax deductible and distributions are taxable
B
Contributions are nondeductible and distributions are nontaxable
Roth retirement plans are funded with after-tax (nondeductible) money. Under current tax law,
distributions are received tax-free, including all gains.
A Tax Sheltered Annuity may be established and funded by which of the following?
A
A not-for-profit community hospital association
B
A professional law firm
A+ TEST BANK 4
2025
AD BANKER COMPREHENSIVE EXAM
2025/2026 COMPLETE verifies
QUESTIONS AND CORRECT ANSWERS
|ALREADY GRADED A+||BRAND NEW!!
To be considered terminally ill, federal law defines a terminal illness as one which is expected to
result in the person's death within how many months?
A
36
B
24
C
12
D
6
B
24
Federal law establishes 24 months as a person's maximum life expectancy to be defined as terminally
ill. For the activation of an accelerated death benefit rider, and for the purpose of limiting such
claims, insurance companies often define terminal illness as one which would result in death within
12 months.
Which of the following distributions in a life insurance policy is taxable?
A
Withdrawal of cost basis
B
Interest paid on a death benefit settlement option
A+ TEST BANK 1
, AD BANKER COMPREHENSIVE EXAM
2025
C
Cash dividend from a participating policy
D
Policy loans
B
Interest paid on a death benefit settlement option
Policy loans, cash dividends, and withdrawal of cost basis are not subject to taxation. Interest paid as
part of a death benefit settlement option is taxed as ordinary income.
When may an employer deduct the premiums it pays for an employee's life insurance benefit?
A
An employer cannot ever deduct premiums it pays for an employee's life insurance benefit
B
As long as the business does not derive a direct benefit from the policy
C
Employers can always deduct the premiums it pays for an employee's life insurance benefit
D
If the business does not receive more than 50% of the death benefit
B
As long as the business does not derive a direct benefit from the policy
As long as the insurance death benefit is not payable to the employer when an employee dies, the
premiums paid for the life insurance are deductible to the business.
All of the following statements regarding a Modified Endowment Contract are correct, EXCEPT:
A
Distributions on gains withdrawn from a MEC prior to age 59 1/2 are subject to a 10% penalty in
addition to taxation
B
If a policy is deemed a MEC, the owner has 7 years to receive a refund of excess premiums and
A+ TEST BANK 2
, AD BANKER COMPREHENSIVE EXAM
2025
remove the MEC status
C
Distributions received from a MEC are subject to a LIFO tax treatment
D
A policy that fails the 7-pay test will be deemed a MEC
B
If a policy is deemed a MEC, the owner has 7 years to receive a refund of excess premiums and
remove the MEC status
A policy that does not pass the 7-Pay Test will be deemed a Modified Endowment Contract for the
life of the contract.
All of the following tax-free exchanges of life insurance and annuities are permitted, EXCEPT:
A
Annuity to long term care insurance
B
Life insurance to an annuity
C
Annuity to life insurance
D
Life insurance to long term care insurance
C
Annuity to life insurance
Annuities may not be exchanged for life insurance.
All of the following are characteristics of a qualified retirement plan, EXCEPT:
A
Employer contributions are immediately tax deductible to the employer
B
Employee contributions are either pretax or tax deductible
A+ TEST BANK 3
, AD BANKER COMPREHENSIVE EXAM
2025
C
Employers in private industry are required to establish pension plans
D
The penalty for premature distributions may be waived for death, disability, qualified education
costs, medical expenses and first -time homebuyers
C
Employers in private industry are required to establish pension plans
Qualified retirement plans receive favorable tax treatment, such as deductible premiums to the
employer, pretax or deductible premiums to the employee, and waived penalties for the listed
situations. ERISA is a federal law that sets minimum standards for employers who establish pension
plans in private industry, but does not require employers to establish a plan.
A Roth IRA is unique for which of the following reasons?
A
Contributions are tax deductible and distributions are nontaxable
B
Contributions are nondeductible and distributions are nontaxable
C
Contributions are nondeductible and distributions are taxable
D
Contributions are tax deductible and distributions are taxable
B
Contributions are nondeductible and distributions are nontaxable
Roth retirement plans are funded with after-tax (nondeductible) money. Under current tax law,
distributions are received tax-free, including all gains.
A Tax Sheltered Annuity may be established and funded by which of the following?
A
A not-for-profit community hospital association
B
A professional law firm
A+ TEST BANK 4
