Federal Tax Considerations for Accident & Health
Insurance Exam Questions With Complete Solutions
A noncontributory group disability income plan has a 30-day
waiting period and offers benefits of $2,000 a month. If an
employee is unable to work for 7 months due to a covered
disability, the employee will receive
A $14,000, none of which is taxable.
B $14,000, all of which is taxable.
C $12,000, none of which is taxable.
D $12,000, all of which is taxable. Correct Answers D
All of the following are true of the Key Person disability income
policy EXCEPT
A Benefits are considered taxable income to the business.
B Premiums are not deductible to the business.
C It is typically written to protect the company in the event a
key employee becomes disabled and is unable to work.
D The income may be used to find a replacement for the key
employee. Correct Answers A
All of the following are true of the Key Person disability income
policy EXCEPT
A It is typically written to protect the company in the event a
key employee becomes disabled and is unable to work.
B The income may be used to find a replacement for the key
employee.
C Benefits are considered taxable income to the business.
, D Premiums are not deductible to the business.
Incorrect! Key person disability benefits are not considered
taxable income to the business.
Review Content Next Question Correct Answers C
All of the following are true regarding Key Employee Disability
Income insurance EXCEPT
A The employer owns the policy.
B Benefits are paid to the employer to retrain a new person.
C Premiums are not tax deductible for the employer.
D Benefits are taxable to the employer. Correct Answers D
All of the following would be qualified as a dependent under a
Dependent Care Flexible Spending Account, EXCEPT
A Pete is severely autistic and refuses to take care of his own
personal needs, which are taken care of by his father
B Jeremy had to have both legs amputated, but has learned how
to take care of himself and to get around in a wheelchair
C Joe was paralyzed from the neck down in a car accident and is
cared for by his wife
D Matt must be constantly watched due to his violent muscle
spasms which often lead to Matt injuring himself Correct
Answers B
An individual is insured under his employer's group Disability
Income policy. The insured suffered an accident while on
vacation that left him unable to work for 4 months. If the
disability income policy pays the benefit, which of the following
would be true?
Insurance Exam Questions With Complete Solutions
A noncontributory group disability income plan has a 30-day
waiting period and offers benefits of $2,000 a month. If an
employee is unable to work for 7 months due to a covered
disability, the employee will receive
A $14,000, none of which is taxable.
B $14,000, all of which is taxable.
C $12,000, none of which is taxable.
D $12,000, all of which is taxable. Correct Answers D
All of the following are true of the Key Person disability income
policy EXCEPT
A Benefits are considered taxable income to the business.
B Premiums are not deductible to the business.
C It is typically written to protect the company in the event a
key employee becomes disabled and is unable to work.
D The income may be used to find a replacement for the key
employee. Correct Answers A
All of the following are true of the Key Person disability income
policy EXCEPT
A It is typically written to protect the company in the event a
key employee becomes disabled and is unable to work.
B The income may be used to find a replacement for the key
employee.
C Benefits are considered taxable income to the business.
, D Premiums are not deductible to the business.
Incorrect! Key person disability benefits are not considered
taxable income to the business.
Review Content Next Question Correct Answers C
All of the following are true regarding Key Employee Disability
Income insurance EXCEPT
A The employer owns the policy.
B Benefits are paid to the employer to retrain a new person.
C Premiums are not tax deductible for the employer.
D Benefits are taxable to the employer. Correct Answers D
All of the following would be qualified as a dependent under a
Dependent Care Flexible Spending Account, EXCEPT
A Pete is severely autistic and refuses to take care of his own
personal needs, which are taken care of by his father
B Jeremy had to have both legs amputated, but has learned how
to take care of himself and to get around in a wheelchair
C Joe was paralyzed from the neck down in a car accident and is
cared for by his wife
D Matt must be constantly watched due to his violent muscle
spasms which often lead to Matt injuring himself Correct
Answers B
An individual is insured under his employer's group Disability
Income policy. The insured suffered an accident while on
vacation that left him unable to work for 4 months. If the
disability income policy pays the benefit, which of the following
would be true?
