Exam (elaborations) INS 3303 Life Ins 2nd half Final Study Guide

For estate tax purposes, life insurance Selected Answer: held by a revocable life insurance trust is includable in the grantor's estate  Question 2 0 out of 2 points Which of the following goals can be achieved by the use of key employee life insurance? Assure shareholders of a public corporation that the price of the stock will not plummet at the death of a president or other senior executive.  Question 3 0 out of 2 points Which of the following circumstances, if true, would make a nonqualified deferred compensation plan inadvisable? Answer s: the business is not likely to survive the death, disability or retirement of its key employees  Question 4 0 out of 2 points All of these recent changes in qualified plan pension law have made nonqualifying deferred compensation plans more attractive, except easier nondiscrimination rules place fewer restraints on employer's discretion  Question 5 2 out of 2 points Which of the following types of qualified plans provides the most advantageous treatment of life insurance? Selected Answer: defined benefit plan  Question 6 INS 3303 Life Ins 2nd half Final Study Guide 0 out of 2 points Which of the following statements regarding the tax implications of key employee life insurance is correct? Answer s: The sale of key employee insurance to the insured employee is exempt from the transfer for value rule.  Question 7 0 out of 2 points Which of the following is one of the key advantages of using life insurance in a qualified plan? the ability of an employer to provide employees with retirement benefits on more favorable terms than would be available through individually purchased products  Question 8 0 out of 2 points Once a grantor transfers assets to a revocable living trust, any income losses, deductions, or credits become taxable to the trust, even if the grantor is the trustee. Fals e  Question 9 0 out of 2 points In order for a participant to avoid current taxation of his benefits under a nonqualified deferred compensation plan, he must not be deemed to have constructive receipt of income under the plan. Constructive receipt can be avoided if certain provisions are included in the design of the plan. Which one of the three following provisions will not avoid constructive receipt? a provision that permits the employee to place his benefits beyond the reach of the employer's creditors if he suspects that the employer is in financial difficulty  Question 10 0 out of 2 points The life insurance products used to fund a qualified plan may provide employees with retirement benefits at more favorable terms than individual contracts. Answer s: True  Question 11