Team Af Quiz Life Insurance--general

The statement is true because MEC stands for Modified Endowment Contract. This type of contract is a life insurance policy that has been funded with more money than allowed by federal tax laws. MECs have different tax implications compared to regular life insurance policies, such as penalties for early withdrawals and the loss of certain tax benefits. Therefore, it is important for individuals to be aware of the MEC status of their life insurance policies.

A needs analysis is a crucial step in determining the appropriate face amount of a life insurance policy. It involves assessing the financial needs and obligations of the insured and their dependents, such as income replacement, debt repayment, education expenses, and funeral costs. By conducting a needs analysis, insurance agents can ensure that the policy adequately covers these financial needs and provides sufficient protection for the insured and their loved ones. Therefore, it is important for all life insurance policies to be sold using some type of needs analysis.

The primary purpose of life insurance is to provide a death benefit, meaning that if the insured person were to pass away, their beneficiaries would receive a payout from the insurance company. This death benefit is typically intended to provide financial support to the deceased person's loved ones, helping them cover expenses such as funeral costs, outstanding debts, or ongoing living expenses. While there may be additional benefits or features associated with certain life insurance policies, the main objective is to provide financial protection to the insured person's family or dependents in the event of their death.

Permanent life insurance offers several tax advantages, including tax-deferred growth, basis out first (FIFO), and tax-free loans. Tax-deferred growth means that the policy's cash value can grow without being subject to income taxes. Basis out first (FIFO) allows policyholders to withdraw their basis (the amount they have paid in premiums) before any gains, which can help minimize taxes. Additionally, policyholders can take out tax-free loans against the cash value of their policy, providing them with a source of tax-free funds. Therefore, all of the options listed - tax-deferred growth, basis out first (FIFO), and tax-free loans - are tax advantages of permanent life insurance.

Most people have their retirement savings in the category of tax deferred growth, taxable distributions. This means that their retirement savings are allowed to grow tax-deferred until they are withdrawn, at which point they are subject to taxation. This is a common way for individuals to save for retirement as it allows them to benefit from the growth of their investments without immediately paying taxes on them. However, when they eventually withdraw the funds, they will be required to pay taxes on the distributions.

The correct answer is 3 because there are three different Death Benefit Options available on the Ultra Index Universal Life Policy.

There are 5 Primary Term Rider layers available on a True Term policy.

Allstate Whole Life Advantage Policy does not pay dividends.

When a Life Insurance Policy becomes a MEC (Modified Endowment Contract), the tax advantages of Basis Out First (FIFO) and Tax Free Loans are lost. Basis Out First refers to the ability to withdraw any contributions made to the policy before any earnings, which is no longer available once the policy becomes a MEC. Tax Free Loans allow policyholders to borrow against the cash value of the policy without incurring any tax consequences, which is also lost when the policy becomes a MEC. Therefore, the correct answer is C & D.