Retirement and Other Insurance Concepts
A client considering a life settlement asks what he should weigh before selling. Which point is most important to raise?
Answer and explanation
Answer: B. A settlement ends the family's protection, can create taxable income above basis, and the proceeds may be exposed to creditors or affect need-based benefits. Alternatives such as accelerated benefits or a loan should be compared.Source: NAIC Life Insurance Buyer's Guide — Life settlements: consumer considerations and alternatives
More retirement and other insurance concepts questions
- If an employer provides an employee with $150,000 of group term life insurance coverage, how is the coverage above $50,000 taxed to the employee?
- In a business partnership with 3 partners, how many separate life insurance policies are required to fund a cross-purchase buy-sell agreement?
- In a corporate key-person life insurance arrangement, who is the policyowner, premium payor, and beneficiary?
- Two clients need the same monthly survivor income. Why does the capital retention approach require a larger death benefit than capital liquidation?
- Under a third-party owned policy, who may take a policy loan against the accumulated cash value?
- Under an Executive Bonus Plan (IRC Section 162), how are premium payments structured and taxed for the executive?
589 Florida questions like this one.
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