Question

17. Which type of term life insurance is most commonly used by people with mortgages increasing term b. level term C. decreasing term d. straight term whole term 18. Which Which one of the following most accurately describes the taxability of life insurance? a. death benefits are income-tax-free to the beneficiary b. annual increases in cash value are tax deductible c. death benefits are always estate-tax-free d. premiums are tax deductible e. none of the above are true 19. Frankie handles financial and marketing matters at the XKG Corporation. Johnny is the plant manager who keeps the XKG production lines running efficiently. If Frankie arranges a key person life insurance policy to protect against the death of Johnny, which of the following normally applies to this type of policy? a. Johnny should be the owner and the beneficiary. b. XKG should be the owner and Frankie the beneficiary. XKG should be the owner and the beneficiary. d. XKG should be the owner and Johnny should be the beneficiary. None of the above normally apply in this case 20. With which type of life insurance are you allowed to skip a premium payment and still have the policy remain in force? a. level term life b. universal life c. whole life d. decreasing term life e. None of these types of life insurance allow you to skip a premium payment and still have the policy remain in force. 21. Which one of the following statements is TRUE about Medicare? Part A covers inpatient hospital care and a premium is required. b. Part B covers doctor bills and no premium is required. Part D covers prescription drugs and a premium is required. d. Part A covers doctor bills and no premium is required e. None of the above are TRUE. c.

Answer 1

Question 17

People with mortgages generally take decreasing plans to match the principal repayment of their mortgages. Since you keep paying the mortgages every year, the outstanding principal keep decreasing.

Answer: Option (c)

Question 18

Premiums paid under life insurance are considered 'personal expenses' and hence not deductible. Also, the proceeds may be included in your estate if the deceased person was the owner of the policy at the time of death. However, death benefits are not included in the total income of the beneficiary.

Answer: Option (a)