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Life and Health Insurance Producer Exam

Taxes, retirement and Social Security: practice questions

Our Life & Health Insurance bank has 23 questions on this topic. Here are 5 of them with answers; the full mock exam draws from every topic, like the real one.

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Question 1

Are medical expense insurance benefits generally taxable?

  1. Yes, they are taxed as ordinary income
  2. Yes, but only if the claim exceeds $5,000
  3. No, reimbursements for medical expenses are generally not taxable
  4. Only if the policy was bought individually rather than through an employer
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C. No, reimbursements for medical expenses are generally not taxable — Individual premiums may be deductible above a threshold if itemizing.

Question 2

How many credits are needed to be fully insured for Social Security retirement benefits?

  1. 60 credits (about 15 years of work)
  2. 20 credits (about 5 years of work)
  3. 40 credits (about 10 years of work)
  4. 80 credits (about 20 years of work)
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C. 40 credits (about 10 years of work) — A worker can earn up to 4 credits a year.

Question 3

What is a defined contribution plan?

  1. A plan that pays a benefit based only on the employee's years of service
  2. A plan funded entirely by Social Security taxes
  3. A plan that guarantees a set monthly pension for life
  4. A plan where contributions are set and the benefit depends on the account value
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D. A plan where contributions are set and the benefit depends on the account value — 401(k) plans are defined contribution plans.

Question 4

How are group term life premiums for coverage over $50,000 treated for employees?

  1. The cost of coverage above $50,000 is taxable income to the employee
  2. Only coverage under $50,000 is taxable to the employee
  3. No group life premiums are ever taxable to the employee
  4. All group life premiums paid by the employer are taxable income to the employee
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A. The cost of coverage above $50,000 is taxable income to the employee — Imputed income is calculated using IRS Table I.

Question 5

What is the Social Security lump-sum death benefit?

  1. A one-time payment of $255 to an eligible survivor
  2. A payment equal to one full year of the worker's average wages, paid to the estate
  3. A monthly payment for life to any adult child
  4. A payment of $10,000 to the worker's estate
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A. A one-time payment of $255 to an eligible survivor — Monthly survivor benefits are separate.

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