1. Kari is a gastroenterologist who has a thriving practice. She has a sizeable net worth and income. Buying a PLUP with more than $1 million of coverage is unnecessary.

True

False

2. Ginger purchased a single-premium deferred annuity ten years ago at age 45. She used $40,000 of after-tax funds she had accumulated over fifteen years. She decides to surrender the annuity for a lump-sum distribution of its $90,000 value. Which of the following statements is correct?

a.  Ginger will owe income taxes on $50,000.

b.  Ginger will owe income taxes on $90,000.

c.  Ginger will owe income taxes and a 10% penalty on $90,000.

d.  Ginger will owe income taxes and a 10% penalty on $50,000.