Retirement and other life insurance concepts practice questions (Massachusetts)
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Section IV of the Massachusetts Life Producer exam, "Retirement and Other Insurance Concepts," has 8 scored questions. [1] The outline lists third-party ownership, life settlements, group life (conversion and contributory versus noncontributory), qualified and nonqualified retirement plans, needs analysis (personal and business, including key person and buy sell), Social Security benefits, and the tax treatment of premiums, proceeds and dividends, including Modified Endowment Contracts. [1] This page covers these topics from Massachusetts law, the Division of Insurance and the IRS, with 10 practice questions.
Key points
- Group life: group policies through employers "are often cheaper than individual ones," often need no medical exam, though late enrollment may require proof of good health. [2]
- Group conversion notice: a certificate holder must be told about a conversion privilege within fifteen days after the event. If no notice is given within ninety days, the privilege ends at ninety days. (M.G.L. c. 175, s. 134A) [3]
- Life settlements: "A viatical settlement is not insurance." It "sells the death benefit to a third party in return for immediate cash." [4]
- Death benefits and taxes: "Your basic death benefits are not taxed." On cash value life insurance, "Taxes on interest and dividends earned are deferred, may be taxed if money is withdrawn." [5]
Practice questions
1. Why might an employee choose group life coverage at work?
Answer: The Division notes group policies are often cheaper than individual ones and often need no medical exam. Late enrollment may require proof of good health. [2]
2. A group life certificate holder's coverage ends. Within how many days must they be told about the conversion privilege?
Answer: Fifteen days after the event. (M.G.L. c. 175, s. 134A) [3]
3. Is a viatical settlement a form of insurance?
Answer: No. The Division says a viatical settlement is not insurance. The owner sells the death benefit to a third party for immediate cash. [4]
4. What range of the expected death benefit does the Division say viatical payments generally fall in?
Answer: Between 50 and 90 percent. [4]
5. A life settlement owner signs the contract. How long do they have to terminate it in Massachusetts?
Answer: Not more than 15 days after it is executed by all parties. (M.G.L. c. 175, s. 220) [6]
6. Are basic life insurance death benefits taxed?
Answer: The Division says basic death benefits are not taxed. [5]
7. What is the 2026 limit on employee elective deferrals to a 401(k) plan?
Answer: $24,500, with an $8,000 catch-up limit for employees aged 50 and over. [7]
8. What is the 2026 limit on annual IRA contributions?
Answer: $7,500, plus a $1,100 catch-up for people aged 50 and over. [7]
9. Are Roth IRA contributions deductible?
Answer: No. "You cannot deduct contributions to a Roth IRA." If requirements are met, qualified distributions are tax-free. [8]
10. How much life insurance do consumer groups suggest, according to the Division?
Answer: Some consumer groups recommend five times your gross annual income, and some industry organizations recommend ten times. [4]
More on life settlements in Massachusetts
- A life insurance producer licensed with a life line of authority for at least 1 year, who meets the rest of section 213, is deemed to meet the life settlement broker licensing rules, but must notify the commissioner within 30 days of first acting as a broker. (M.G.L. c. 175, s. 213) [9]
- The provider must tell the owner, not later than the date of application, that alternatives such as accelerated benefits exist, that proceeds may be taxable, and that proceeds may affect eligibility for public assistance. (M.G.L. c. 175, s. 220) [6]
Study tips
- Group life: cheaper, usually no exam, and a 15 and 90 day conversion notice rule in Massachusetts law.
- Life settlements: not insurance, 15 days to terminate in Massachusetts.
- Retirement numbers change every year. The figures above are the IRS limits for 2026.
Practice more with the free Massachusetts Life practice test.
Prep Retention is independent and is not affiliated with Pearson VUE or the state.
Sources
- Pearson VUE, Massachusetts content outlines 122301 (effective July 22, 2026): https://www.pearsonvue.com/content/dam/VUE/vue/en/documents/publications/122301.pdf
- Massachusetts Division of Insurance, Life Insurance Basics: https://www.mass.gov/info-details/life-insurance-basics
- M.G.L. c. 175, s. 134A: https://malegislature.gov/Laws/GeneralLaws/PartI/TitleXXII/Chapter175/Section134A
- Massachusetts Division of Insurance, Buying Life Insurance and Annuities in Massachusetts, Part Two: https://www.mass.gov/info-details/buying-life-insurance-and-annuities-in-massachusetts-part-two
- Massachusetts Division of Insurance, Buying Life Insurance and Annuities in Massachusetts, Part One: https://www.mass.gov/info-details/buying-life-insurance-and-annuities-in-massachusetts-part-one
- M.G.L. c. 175, s. 220: https://malegislature.gov/Laws/GeneralLaws/PartI/TitleXXII/Chapter175/Section220
- IRS, 401(k) limit increases to $24,500 for 2026, IRA limit increases to $7,500 (IR-2025-111): https://www.irs.gov/newsroom/401k-limit-increases-to-24500-for-2026-ira-limit-increases-to-7500
- IRS, Roth IRAs: https://www.irs.gov/retirement-plans/roth-iras
- M.G.L. c. 175, s. 213: https://malegislature.gov/Laws/GeneralLaws/PartI/TitleXXII/Chapter175/Section213