CRPC Annuities and Insurance Products in Retirement 3

Question 1

What is the primary role of permanent life insurance in retirement income planning?

Accepted Answer

To provide a tax-free death benefit, supplement retirement income via policy loans, and create an estate legacy

Answer

To replace lost wages if the insured dies during working years

Answer

To fund a Roth IRA conversion strategy

Answer

To replace the need for long-term care insurance

Question 2

How does an Indexed Universal Life (IUL) policy function as a retirement planning tool?

Accepted Answer

It is a permanent life policy with index-linked cash value growth and tax-free income potential via policy loans

Answer

It is a term policy with index-linked premiums

Answer

It is a variable annuity embedded in a life insurance wrapper

Answer

It is a Medicare supplement insurance policy

Question 3

What is the primary risk when using life insurance policy loans as a retirement income source?

Accepted Answer

Excessive loans can cause the policy to lapse, creating a large taxable event on outstanding loan balances

Answer

Policy loans trigger immediate income taxation

Answer

Policy loans permanently reduce the death benefit

Answer

Policy loans incur a 10% early withdrawal penalty

Question 4

What is a split-dollar life insurance arrangement?

Accepted Answer

An arrangement where two parties share premium costs and policy benefits, typically employer and employee

Answer

A policy that splits premiums between two insurance carriers

Answer

A policy that pays the death benefit in two separate installments

Answer

A joint life policy purchased by spouses

Question 5

What is the federal annual gift tax exclusion amount for 2024?

Accepted Answer

$18,000

Answer

$13,000

Answer

$17,000

Answer

$20,000

Question 6

What is the primary estate planning benefit of an Irrevocable Life Insurance Trust (ILIT)?

Accepted Answer

Life insurance proceeds are excluded from the taxable estate while providing liquidity for estate taxes

Answer

It allows the insured to retain control of premium payments

Answer

It converts term insurance into permanent insurance

Answer

It qualifies the death benefit for the unlimited marital deduction