NEBRASKA LIFE AND HEALTH COMPREHENSIVE EXAM
2025/2026 QUESTIONS WITH SOLUTIONS RATED A+
✔✔Under a SIMPLE plan, which of the following is true regarding taxation on both
contribution and earning ? - ✔✔They are tax deferred till withdrawn
✔✔Employer contributions made to a qualified plan A) Have no vesting requirement B)
Are taxable as salary C) Are subject to vesting requirements. D) Are taxable - ✔✔C) Are
subject to vesting requirements.
✔✔Under the 401k bonus or thrift plan, the employer will contribute - ✔✔an
undetermined percentage for each dollar contribute by the employee
✔✔A 403(b) plan, commonly referred to as a TSA, is available to be used by - ✔✔Tax
sheltered annuities, commonly referred to as 403 (b) plans are designed for teachers
and not-for-profit organizations.
✔✔A 60yr old participant in a 401(k)plan takes a distribution and rolls it over to an IRA
within 60 days. Which of the following is true? A) No taxes are due since the plan
participant is over age 59.5 B) There is a 10% early withdrawal penalty. C) The amount
distributed is subject to ordinary income tax. D) The amount of distribution is reduced by
the amount of a 20% withholding tax. - ✔✔The amount of distribution is reduced by the
amount of a 20% withholding tax.
✔✔Which of the following terms is used to name the non-taxed return of unused
premium? - ✔✔Dividend
✔✔What is the main purpose of the Seven-pay Test? - ✔✔To determine if a life
insurance policy is a Modified Endowment Contract
✔✔Which of the following is true regarding taxation of dividends in participating
policies? A. Dividends are considered income for tax purposes B. Dividends are taxable
in some life insurance policies and nontaxable in others C. Dividends are nontaxable D.
Dividends are taxable only after a certain amount is accumulated annually - ✔✔C.
Dividends are nontaxable
✔✔If taken as a lump sum, life insurance proceeds to beneficiaries are passed -
✔✔Free of federal income taxation.
✔✔When must an IRA be completely distributed when a beneficiary is not named -
✔✔December 31 of the year that contains the fifth anniversary of the owner's death
,✔✔What type of annuity activity will cause immediate taxation of the interest earned? -
✔✔Surrendering the annuity for cash
✔✔what is the tax consequence of amounts received from a traditional IRA after the
money was left in a tax deferred account by beneficiary - ✔✔income tax on distributions
and no penalty
✔✔Which of the following is NOT an allowable 1035 exchange - ✔✔A whole life
insurance policy is exchanged for a term insurance policy
✔✔Which of the following describes the tax advantage of a qualified retirement plan? A)
Employer contributions are deductible as a business expense when the employee
receives benefits B) Employer contributions are not taxed when paid out to the
employee. C) The earnings in the plan accumulate tax deferred D) Distributions prior to
age 59.5 are tax deductible - ✔✔C) The earnings in the plan accumulate tax deferred
✔✔who can make a fully deductible contribution to a traditional IRA - ✔✔an individual
not covered by an employer sponsored plan who has earned income
✔✔Randy transfers his life insurance policy to his son Andy two years before Randy's
death. Which of the following is true? - ✔✔The entire face value of the policy will be
included in Randy's taxable estate.
✔✔A policyowner cancels his life policy but instructs the insurance company to transfer
the cash value of his policy to an annuity. This nontaxable transaction is called
a)Qualified distribution. b)Premature distribution. c)Rollover. d)1035 exchange. -
✔✔d)1035 exchange.
✔✔In a direct rollover, how is the money transferred from one retirement plan to a new
one? - ✔✔From trustee to trustee
✔✔Which of the following best describes taxation during the accumulation period of an
annuity? - ✔✔Taxes are deferred.
✔✔what is true regarding taxation of dividends in participating policies? - ✔✔dividends
are not taxable
✔✔Which of the following describes the taxation of an annuity when money is
withdrawn during the accumulation phase? - ✔✔Withdrawn amounts are taxed on a
last-in-first-out basis.
✔✔An applicant buy a nonqualified, but dies before the starting date. For which of the
following beneficiaries would the contract's interest NOT be taxable ? - ✔✔Spouse
, ✔✔An insured has a Modified Endowment Contract. He wants to withdraw some money
in order to pay medical bills. Which of the following is true?
A) He cannot withdraw money from his MEC before age 59 1/2 B) He will have to pay a
penalty if he is younger than 59 1/2
C) He will have to pay a penalty regardless of his age
D) He will not have to pay a penalty, regardless of his age - ✔✔B He will have to pay a
penalty if he is younger than 59 1/2
✔✔Underwriting is a major consideration when an insured wishes to replace her current
policy for all the following reasons EXCEPT
A. premiums always stay the same
B. due to age or health, the policy may change drastically
C. preexisting conditions that were previously covered may not be covered under the
replacing policy
D. benefits may change - ✔✔A. premiums always stay the same
✔✔Which of the following would NOT be considered a primary risk factor in
underwriting individual health insurance policies? a. Martial status b. Physical condition
of the applicant c. Occupation of the applicant d. Moral hazard - ✔✔a) Martial status
✔✔Health plans that cover a small group of individuals; however, unlike group
insurance each individual is issued an individual polic - ✔✔Franchise Insurance
✔✔If an applicant for a life insurance policy is found to be a substandard risk, the
insurance company is MOST likely to: - ✔✔Charge and extra premium
✔✔which of the following factors about the insured determines the amount of disability
benefit that the insured will receive? - ✔✔Income
✔✔Which of the following groups would probably be covered by blanket insurance? -
✔✔A university's sports team
✔✔Which of the following groups would most likely be covered under a blanket accident
policy? a) Independent contractors who work for a general contractor b) Students at a
public school c) Office workers for a retail business d) Factory workers at the
automobile assembly plant - ✔✔Answer: B Students at a public school
✔✔Which of the following do the Standard and Preferred risk categories share? -
✔✔Premiums are not elevated
✔✔Evaluating information that establishes adverse selection risk is the purpose of
which stage of insurance?
2025/2026 QUESTIONS WITH SOLUTIONS RATED A+
✔✔Under a SIMPLE plan, which of the following is true regarding taxation on both
contribution and earning ? - ✔✔They are tax deferred till withdrawn
✔✔Employer contributions made to a qualified plan A) Have no vesting requirement B)
Are taxable as salary C) Are subject to vesting requirements. D) Are taxable - ✔✔C) Are
subject to vesting requirements.
✔✔Under the 401k bonus or thrift plan, the employer will contribute - ✔✔an
undetermined percentage for each dollar contribute by the employee
✔✔A 403(b) plan, commonly referred to as a TSA, is available to be used by - ✔✔Tax
sheltered annuities, commonly referred to as 403 (b) plans are designed for teachers
and not-for-profit organizations.
✔✔A 60yr old participant in a 401(k)plan takes a distribution and rolls it over to an IRA
within 60 days. Which of the following is true? A) No taxes are due since the plan
participant is over age 59.5 B) There is a 10% early withdrawal penalty. C) The amount
distributed is subject to ordinary income tax. D) The amount of distribution is reduced by
the amount of a 20% withholding tax. - ✔✔The amount of distribution is reduced by the
amount of a 20% withholding tax.
✔✔Which of the following terms is used to name the non-taxed return of unused
premium? - ✔✔Dividend
✔✔What is the main purpose of the Seven-pay Test? - ✔✔To determine if a life
insurance policy is a Modified Endowment Contract
✔✔Which of the following is true regarding taxation of dividends in participating
policies? A. Dividends are considered income for tax purposes B. Dividends are taxable
in some life insurance policies and nontaxable in others C. Dividends are nontaxable D.
Dividends are taxable only after a certain amount is accumulated annually - ✔✔C.
Dividends are nontaxable
✔✔If taken as a lump sum, life insurance proceeds to beneficiaries are passed -
✔✔Free of federal income taxation.
✔✔When must an IRA be completely distributed when a beneficiary is not named -
✔✔December 31 of the year that contains the fifth anniversary of the owner's death
,✔✔What type of annuity activity will cause immediate taxation of the interest earned? -
✔✔Surrendering the annuity for cash
✔✔what is the tax consequence of amounts received from a traditional IRA after the
money was left in a tax deferred account by beneficiary - ✔✔income tax on distributions
and no penalty
✔✔Which of the following is NOT an allowable 1035 exchange - ✔✔A whole life
insurance policy is exchanged for a term insurance policy
✔✔Which of the following describes the tax advantage of a qualified retirement plan? A)
Employer contributions are deductible as a business expense when the employee
receives benefits B) Employer contributions are not taxed when paid out to the
employee. C) The earnings in the plan accumulate tax deferred D) Distributions prior to
age 59.5 are tax deductible - ✔✔C) The earnings in the plan accumulate tax deferred
✔✔who can make a fully deductible contribution to a traditional IRA - ✔✔an individual
not covered by an employer sponsored plan who has earned income
✔✔Randy transfers his life insurance policy to his son Andy two years before Randy's
death. Which of the following is true? - ✔✔The entire face value of the policy will be
included in Randy's taxable estate.
✔✔A policyowner cancels his life policy but instructs the insurance company to transfer
the cash value of his policy to an annuity. This nontaxable transaction is called
a)Qualified distribution. b)Premature distribution. c)Rollover. d)1035 exchange. -
✔✔d)1035 exchange.
✔✔In a direct rollover, how is the money transferred from one retirement plan to a new
one? - ✔✔From trustee to trustee
✔✔Which of the following best describes taxation during the accumulation period of an
annuity? - ✔✔Taxes are deferred.
✔✔what is true regarding taxation of dividends in participating policies? - ✔✔dividends
are not taxable
✔✔Which of the following describes the taxation of an annuity when money is
withdrawn during the accumulation phase? - ✔✔Withdrawn amounts are taxed on a
last-in-first-out basis.
✔✔An applicant buy a nonqualified, but dies before the starting date. For which of the
following beneficiaries would the contract's interest NOT be taxable ? - ✔✔Spouse
, ✔✔An insured has a Modified Endowment Contract. He wants to withdraw some money
in order to pay medical bills. Which of the following is true?
A) He cannot withdraw money from his MEC before age 59 1/2 B) He will have to pay a
penalty if he is younger than 59 1/2
C) He will have to pay a penalty regardless of his age
D) He will not have to pay a penalty, regardless of his age - ✔✔B He will have to pay a
penalty if he is younger than 59 1/2
✔✔Underwriting is a major consideration when an insured wishes to replace her current
policy for all the following reasons EXCEPT
A. premiums always stay the same
B. due to age or health, the policy may change drastically
C. preexisting conditions that were previously covered may not be covered under the
replacing policy
D. benefits may change - ✔✔A. premiums always stay the same
✔✔Which of the following would NOT be considered a primary risk factor in
underwriting individual health insurance policies? a. Martial status b. Physical condition
of the applicant c. Occupation of the applicant d. Moral hazard - ✔✔a) Martial status
✔✔Health plans that cover a small group of individuals; however, unlike group
insurance each individual is issued an individual polic - ✔✔Franchise Insurance
✔✔If an applicant for a life insurance policy is found to be a substandard risk, the
insurance company is MOST likely to: - ✔✔Charge and extra premium
✔✔which of the following factors about the insured determines the amount of disability
benefit that the insured will receive? - ✔✔Income
✔✔Which of the following groups would probably be covered by blanket insurance? -
✔✔A university's sports team
✔✔Which of the following groups would most likely be covered under a blanket accident
policy? a) Independent contractors who work for a general contractor b) Students at a
public school c) Office workers for a retail business d) Factory workers at the
automobile assembly plant - ✔✔Answer: B Students at a public school
✔✔Which of the following do the Standard and Preferred risk categories share? -
✔✔Premiums are not elevated
✔✔Evaluating information that establishes adverse selection risk is the purpose of
which stage of insurance?
