A policy received in a 1035 exchange has an investment in

Reference no: EM13476886

Question 1. Once a policy is classified as a modified endowment contract, with certain corrections, it can be later treated as not a modified endowment contract.

True
False

Question 2. Because of the way that it is taxed, a modified endowment contract is not considered a life insurance policy for tax purposes.

True

False

Question 3. A modified endowment contract is a life insurance policy that has failed

the test for life insurance

the seven-pay test

the transfer for value rule

the rule against perpetuities

Question 4. A policy received in a 1035 exchange has an investment in the contract in the amount of the fair market value of the old policy.

True

False

Question 5. Which of the following would NOT be a valid exchange under Section 1035?

A life insurance contract for an annuity contract.

An endowment contract for an annuity contract.

After 2009, an annuity contract for a life insurance contract.

After 2009, a life insurance contract for a qualified long-term care contract.

Reference no: EM13476886

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