Arkansas Life and Health Insurance Practice Exam

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Prepare for the Arkansas Life and Health Insurance Exam. Utilize flashcards and multiple-choice questions with hints and explanations for each question. Get thoroughly ready for your certification test!

Each practice test/flash card set has 50 randomly selected questions from a bank of over 500. You'll get a new set of questions each time!

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Jay receives an annual disability benefit of $10,000. His employer contributed 75% of the premium. How much of Jay's benefit is subject to income tax?

$2,500
$5,000
$7,500
$10,000

The correct answer is: $2,500

Since Jay's employer contributed 75% of the premium for his disability benefit, Jay is responsible for the remaining 25%. This means that 25% of the $10,000 annual disability benefit, which is $2,500, is considered taxable income for Jay. Therefore, the correct answer is $2,500 (Option A). Options B, C, and D are incorrect because they do not accurately reflect the portion of Jay's disability benefit that is subject to income tax.