Podcast
Questions and Answers
Which of the following is a beneficiary designation based on a group of people with shared characteristics?
Which of the following is a beneficiary designation based on a group of people with shared characteristics?
Who are the named individuals or entities the policyowner designates to receive life insurance policy proceeds upon the insured's death?
Who are the named individuals or entities the policyowner designates to receive life insurance policy proceeds upon the insured's death?
Beneficiaries
All of the following options are available if the only logical beneficiary is a minor, EXCEPT:
All of the following options are available if the only logical beneficiary is a minor, EXCEPT:
When Alice dies, the death benefit will be paid to Walter. If Walter dies before Alice, the benefit would go to Alexander. Which of the following statements is true?
When Alice dies, the death benefit will be paid to Walter. If Walter dies before Alice, the benefit would go to Alexander. Which of the following statements is true?
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Which beneficiary designation is most appropriate for a person who wants to name his spouse as a beneficiary of his life insurance policy, and simultaneously retain full policy ownership rights?
Which beneficiary designation is most appropriate for a person who wants to name his spouse as a beneficiary of his life insurance policy, and simultaneously retain full policy ownership rights?
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Under the Uniform Simultaneous Death Act, who will receive the death benefit if Mary and Philip are in a car accident and there is no evidence of who died first?
Under the Uniform Simultaneous Death Act, who will receive the death benefit if Mary and Philip are in a car accident and there is no evidence of who died first?
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Which of the following prevents creditors from seizing life insurance policy proceeds as long as there is at least one living named beneficiary, excluding the insured's estate?
Which of the following prevents creditors from seizing life insurance policy proceeds as long as there is at least one living named beneficiary, excluding the insured's estate?
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If an irrevocable beneficiary is named on a life insurance policy, all of the following statements are true, EXCEPT:
If an irrevocable beneficiary is named on a life insurance policy, all of the following statements are true, EXCEPT:
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What does the Common Disaster Clause require?
What does the Common Disaster Clause require?
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What is true according to the Uniform Simultaneous Death Act if the insured and the primary beneficiary are killed in a car accident?
What is true according to the Uniform Simultaneous Death Act if the insured and the primary beneficiary are killed in a car accident?
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Study Notes
Beneficiary Designations in Life Insurance
- Class Designation: A group designation that allows all members sharing common traits to become beneficiaries.
- Beneficiaries: Named individuals or entities that receive life insurance proceeds upon the insured's death.
Minor Beneficiaries
- Options for minor beneficiaries include appointing a guardian, setting up a trust, or using the insurance company to manage proceeds.
- Benefits cannot go directly to the estate of the insured if the sole logical beneficiary is a minor.
Primary and Contingent Beneficiaries
- In scenarios where the primary beneficiary (e.g., Walter) dies before the policyholder (e.g., Alice), the contingent beneficiary (e.g., Alexander) will receive the benefit.
- Alice’s relationship as the policyholder and Walter’s as the primary beneficiary defines their roles, with Alexander as the backup.
Revocable vs. Irrevocable Beneficiary
- A revocable beneficiary designation allows the policy owner to retain full ownership rights while naming a spouse as the beneficiary.
- An irrevocable beneficiary requires mutual agreement for changes; consent is needed for borrowing against the cash value.
Uniform Simultaneous Death Act
- This act stipulates that if both the insured and primary beneficiary die simultaneously, the death benefit is distributed as if the primary beneficiary predeceased the insured.
- If the primary beneficiary does not survive past a specified time after the insured's death, the benefit goes to the insured's estate or contingent beneficiaries.
Spendthrift Clause
- A provision that protects life insurance proceeds from creditors, as long as at least one living named beneficiary is present, excluding the insured's estate.
Common Disaster Clause
- Specifies that in case of a disaster, the primary beneficiary must outlive the insured by a certain number of days to claim the death benefit.
- If the primary beneficiary fails to survive that period, the death benefit goes to the insured's estate.
Key Points about Borrowing from Cash Value
- Policy owners with an irrevocable beneficiary must obtain the beneficiary's consent to borrow against the policy’s cash value.
- This restriction emphasizes the legal standing of irrevocable beneficiaries in life insurance policies.
Studying That Suits You
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Description
Test your knowledge on beneficiaries with these flashcards. Each card presents a question about beneficiary designations, including class designations and named individuals. Perfect for anyone looking to understand life insurance better.
