During accumulation, values build before income payments begin.
Example: A client or producer applies this rule in a policy situation. The correct concept is Accumulation period. During accumulation, values build before income payments begin.
PTH original exam-prep item • Original practice item
Life insurance death proceeds are generally excluded from federal gross income when paid by reason of death, subject to exceptions such as transfer-for-value rules.
Example: A client or producer applies this rule in a policy situation. The correct concept is Income-tax free under federal law, subject to exceptions. Life insurance death proceeds are generally excluded from federal gross income when paid by reason of death, subject to exceptions such as transfer-for-value rules.
PTH original exam-prep item • Original practice item
Annuitization converts accumulated value into a stream of payments under the selected option.
Example: A client or producer applies this rule in a policy situation. The correct concept is Annuitization period. Annuitization converts accumulated value into a stream of payments under the selected option.
PTH original exam-prep item • Original practice item
Personal life insurance premiums are generally not deductible as a personal expense.
Example: A client or producer applies this rule in a policy situation. The correct concept is Not deductible for federal income tax purposes. Personal life insurance premiums are generally not deductible as a personal expense.
PTH original exam-prep item • Original practice item
Immediate annuities are designed to start income payments soon after purchase.
Example: A client or producer applies this rule in a policy situation. The correct concept is Immediate annuity. Immediate annuities are designed to start income payments soon after purchase.
PTH original exam-prep item • Original practice item
Life policy cash value generally grows tax deferred while retained in the contract.
Example: A client or producer applies this rule in a policy situation. The correct concept is Tax-deferred treatment while it remains in the policy. Life policy cash value generally grows tax deferred while retained in the contract.
PTH original exam-prep item • Original practice item
Deferred annuities postpone income while value accumulates.
Example: A client or producer applies this rule in a policy situation. The correct concept is Deferred annuity. Deferred annuities postpone income while value accumulates.
PTH original exam-prep item • Original practice item
Policy dividends are generally treated as a return of premium to the extent they do not exceed basis; interest on dividends can be taxable.
Example: A client or producer applies this rule in a policy situation. The correct concept is A return of premium up to the owner's basis. Policy dividends are generally treated as a return of premium to the extent they do not exceed basis; interest on dividends can be taxable.
PTH original exam-prep item • Original practice item
Fixed annuities place investment risk primarily on the insurer and provide guarantees stated in the contract.
Example: A client or producer applies this rule in a policy situation. The correct concept is A minimum interest or stated benefit basis subject to contract terms. Fixed annuities place investment risk primarily on the insurer and provide guarantees stated in the contract.
PTH original exam-prep item • Original practice item
A life policy that fails the seven-pay test is classified as a MEC for federal tax purposes.
Example: A client or producer applies this rule in a policy situation. The correct concept is Seven-pay test. A life policy that fails the seven-pay test is classified as a MEC for federal tax purposes.
PTH original exam-prep item • Original practice item