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Colorado Life & Health Insurance Exam | Guide with Questions and Verified Answers | 100% Correct (Latest 2025 / 2026)
Question:
Types of Business Insurance Needs
Answer:
-Key Employee Life Insurance
-Partnership Life Insurance
-Split Dollar Life Insurance
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Question:
Key Employee Life Insurance
Answer:
-Benefits company not person -Business is beneficiary -Premiums paid are not tax deductible -Proceeds paid are not taxable -In the event that the key employee no longer works for the company, yet premiums are still paid, and they die, policy proceeds would go to company-- TEST
Question:
Partnership Life Insurance
Answer:
-Requires buy-sell agreement drafter by lawyer -Each partner buys policy on the life of the other -If partner dies, policy pays proceeds to the surviving partner -Sometimes called a cross purchase buy-sell agreement -If there are 3 partners a total of 6 policies would have to be sold
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Question:
Social Security Benefits
Answer:
-Small death benefit-only $255 -5 month waiting period -Has survivors' benefits -Benefits indexed for inflation -Some benefits are based upon the Primary Insurance Amount (PIA)- The amount a person would receive if they elect to begin receiving retirement benefits at normal retirement age
Question:
Tax Treatment of Individual Life Insurance
Answer:
-Premiums are not tax deductible -Proceeds are included in the value of the deceased's estate
Question:
Tax Treatment of Group Life Insurance
Answer:
-Tax deductible as business expense
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Question:
Tax Treatment of Modified Endowment Contracts (MEC)
Answer:
-Can't make profit for first 7 years
-Requires company to have a certain amount of risk
-Lose favored tax treatment
-If cash value exceeds the sum of all premiums paid; failed the 7-pay test
Question:
Types Disability Income Insurance
Answer:
-Individual Disability Income Policy -Business Overhead Expense Policy (BOE) -Business Disability Buyout Policy -Group Disability Income Policy -Key Employee/Partner Disability Policies
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