L02 Financial Planning MCQs

Welcome to our comprehensive collection of Multiple Choice Questions (MCQs) on L02 Financial Planning, a fundamental topic in the field of IC38 Life Insurance Agent Exam. Whether you're preparing for competitive exams, honing your problem-solving skills, or simply looking to enhance your abilities in this field, our L02 Financial Planning MCQs are designed to help you grasp the core concepts and excel in solving problems.

In this section, you'll find a wide range of L02 Financial Planning mcq questions that explore various aspects of L02 Financial Planning problems. Each MCQ is crafted to challenge your understanding of L02 Financial Planning principles, enabling you to refine your problem-solving techniques. Whether you're a student aiming to ace IC38 Life Insurance Agent Exam tests, a job seeker preparing for interviews, or someone simply interested in sharpening their skills, our L02 Financial Planning MCQs are your pathway to success in mastering this essential IC38 Life Insurance Agent Exam topic.

Note: Each of the following question comes with multiple answer choices. Select the most appropriate option and test your understanding of L02 Financial Planning. You can click on an option to test your knowledge before viewing the solution for a MCQ. Happy learning!

So, are you ready to put your L02 Financial Planning knowledge to the test? Let's get started with our carefully curated MCQs!

L02 Financial Planning MCQs | Page 6 of 6

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Q51.
What is the primary purpose of tax planning?

a.

Minimizing tax evasion

b.

Gaining maximum tax benefit

c.

Accumulating wealth rapidly

d.

Maximizing income

Discuss
Answer: (b).Gaining maximum tax benefit Explanation:The main purpose of tax planning is to gain maximum tax benefits and take full advantage of existing tax laws.
Q52.
Under which section of the Income Tax Act in India are life insurance premiums eligible for deduction?

a.

Section 80C

b.

Section 10 (10D)

c.

Section 80D

d.

Section 10 (13A)

Discuss
Answer: (a).Section 80C Explanation:Life insurance premiums paid by an individual are eligible for deduction under Section 80C of the Income Tax Act in India.
Q53.
What is the maximum deduction allowed for life insurance premiums under Section 80C of the Income Tax Act in India?

a.

Rs. 50,000

b.

Rs. 1,00,000

c.

Rs. 1,50,000

d.

Rs. 2,00,000

Discuss
Answer: (c).Rs. 1,50,000 Explanation:Currently, the maximum deduction allowed for life insurance premiums under Section 80C of the Income Tax Act in India is Rs. 1,50,000.
Q54.
How are death claim amounts from life insurance policies treated for income tax purposes in India?

a.

Exempt from income tax

b.

Fully taxable as income

c.

Partially taxable, depending on the amount

d.

Exempt only for certain policy types

Discuss
Answer: (a).Exempt from income tax Explanation:Death claim amounts from life insurance policies are exempt from income tax in India.
Q55.
What is the primary objective of financial planning?

a.

Managing current income and expenditures

b.

Maximizing investment returns

c.

Identifying one's life goals

d.

Meeting financial goals and managing finances to achieve them

Discuss
Answer: (d).Meeting financial goals and managing finances to achieve them Explanation:Financial planning aims to meet financial goals and manage finances in ways that help individuals achieve those goals.
Q56.
What are the three types of financial products needed based on the individual life cycle?

a.

Cash planning, retirement planning, and investment planning

b.

Insurance planning, estate planning, and tax planning

c.

Enabling future transactions, meeting contingencies, and wealth accumulation

d.

Life insurance, mutual funds, and fixed deposits

Discuss
Answer: (c).Enabling future transactions, meeting contingencies, and wealth accumulation Explanation:The three types of financial products needed based on the individual life cycle are those that enable future transactions, help in meeting contingencies, and assist in wealth accumulation.
Q57.
What has increased the need for financial planning in modern times?

a.

Limited investment choices

b.

Stable joint family structures

c.

Decreased life expectancy

d.

Changing societal dynamics

Discuss
Answer: (d).Changing societal dynamics Explanation:Changing societal dynamics, such as disintegration of the joint family and evolving lifestyles, have increased the need for financial planning.
Q58.
When is the best time to start financial planning?

a.

After getting married

b.

Post-retirement

c.

As soon as one receives the first salary

d.

When one becomes wealthy

Discuss
Answer: (c).As soon as one receives the first salary Explanation:The best time to start financial planning is right after one receives the first salary.
Q59.
Which of the following is not one of the financial planning advisory services?

a.

Cash planning

b.

Investment planning

c.

Retirement planning

d.

Home buying planning

Discuss
Answer: (d).Home buying planning Explanation:Home buying planning is not listed as one of the financial planning advisory services.
Q60.
Which among the following is not an objective of tax planning?

a.

Maximum tax benefit

b.

Reduced tax burden as a result of prudent investments

c.

Tax evasion

d.

Full advantage of tax breaks

Discuss
Answer: (c).Tax evasion Explanation:Tax planning is about legally and ethically reducing one's tax burden through various strategies and taking full advantage of tax breaks provided by tax laws. Tax evasion, as mentioned in option c, is illegal and involves not paying taxes that are legally owed. Therefore, tax evasion is not an objective of tax planning.
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