Podcast
Questions and Answers
A policyowner's rights are limited under which beneficiary designation?
A policyowner's rights are limited under which beneficiary designation?
What is the underlying concept regarding level premiums?
What is the underlying concept regarding level premiums?
The early years are charged more than what is needed.
A policyowner is allowed to pay premiums more than once a year under which provision?
A policyowner is allowed to pay premiums more than once a year under which provision?
Mode of Premium
If K and her husband are both killed in an automobile accident, where would the death proceeds be directed?
If K and her husband are both killed in an automobile accident, where would the death proceeds be directed?
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The Accidental Death benefits will be paid to whom if P and Q have a car accident and Q and R are killed?
The Accidental Death benefits will be paid to whom if P and Q have a car accident and Q and R are killed?
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Which of these statements is INCORRECT regarding the federal income tax treatment of life insurance?
Which of these statements is INCORRECT regarding the federal income tax treatment of life insurance?
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Which premium schedule results in the lowest cost to the policyowner?
Which premium schedule results in the lowest cost to the policyowner?
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If the insured and primary beneficiary are both killed in the same accident, where are the death proceeds directed under the Uniform Simultaneous Death Act?
If the insured and primary beneficiary are both killed in the same accident, where are the death proceeds directed under the Uniform Simultaneous Death Act?
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Which of the following statements is CORRECT regarding the tax treatment of a lump-sum payment to a primary beneficiary?
Which of the following statements is CORRECT regarding the tax treatment of a lump-sum payment to a primary beneficiary?
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Which type of designation would allow a policyowner to change the beneficiary permanently?
Which type of designation would allow a policyowner to change the beneficiary permanently?
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Under the Common Disaster provision, what happens if K dies before P?
Under the Common Disaster provision, what happens if K dies before P?
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Who is qualified to change the beneficiary designation on a life insurance policy?
Who is qualified to change the beneficiary designation on a life insurance policy?
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Which statement regarding the Change of Beneficiary provision is true?
Which statement regarding the Change of Beneficiary provision is true?
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Which beneficiary designation should J use to maintain the right to change beneficiaries?
Which beneficiary designation should J use to maintain the right to change beneficiaries?
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Which type of life insurance beneficiary requires consent when a change is attempted?
Which type of life insurance beneficiary requires consent when a change is attempted?
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What is true regarding a minor beneficiary in a life insurance policy?
What is true regarding a minor beneficiary in a life insurance policy?
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A policyowner can choose the frequency of premium payments through what policy feature?
A policyowner can choose the frequency of premium payments through what policy feature?
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What allows a whole life insurance policyowner to sell the policy for more than its cash value?
What allows a whole life insurance policyowner to sell the policy for more than its cash value?
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What occurs when a primary beneficiary has died before the insured in a life insurance policy?
What occurs when a primary beneficiary has died before the insured in a life insurance policy?
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What does the Common Disaster clause provide regarding payment of proceeds if both the insured and sole beneficiary die in a common accident?
What does the Common Disaster clause provide regarding payment of proceeds if both the insured and sole beneficiary die in a common accident?
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Which settlement option pays a stated amount to an annuitant, with no residual value to a beneficiary?
Which settlement option pays a stated amount to an annuitant, with no residual value to a beneficiary?
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When can a policyowner change a revocable beneficiary?
When can a policyowner change a revocable beneficiary?
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A level premium indicates what?
A level premium indicates what?
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How much of the death benefit will the mother receive if S dies first and then the father is killed?
How much of the death benefit will the mother receive if S dies first and then the father is killed?
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What percent of personal life insurance premiums is usually deductible for federal income tax purposes?
What percent of personal life insurance premiums is usually deductible for federal income tax purposes?
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What factor would affect C's decision to convert her convertible term life policy to whole life insurance?
What factor would affect C's decision to convert her convertible term life policy to whole life insurance?
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M purchases an Accidental Death and Dismemberment (AD&D) policy and names his son as beneficiary. What type of beneficiary is his son?
M purchases an Accidental Death and Dismemberment (AD&D) policy and names his son as beneficiary. What type of beneficiary is his son?
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Which statement is correct regarding J's monthly premium payment on Whole Life insurance?
Which statement is correct regarding J's monthly premium payment on Whole Life insurance?
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What best describes a contingent beneficiary?
What best describes a contingent beneficiary?
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Why do quarterly premium payments increase the annual cost of insurance?
Why do quarterly premium payments increase the annual cost of insurance?
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What will the insurance company do if T requests a change of beneficiary with an irrevocable beneficiary?
What will the insurance company do if T requests a change of beneficiary with an irrevocable beneficiary?
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How does a contingent beneficiary receive the policy proceeds in an AD&D policy?
How does a contingent beneficiary receive the policy proceeds in an AD&D policy?
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Study Notes
Beneficiary Designations
- Irrevocable Beneficiary: Policyowner's rights are limited; cannot change the beneficiary without consent.
- Revocable Beneficiary: Policyowner can change designation at any time without needing consent.
- Contingent Beneficiary: Receives proceeds if the primary beneficiary is deceased at the time of insured's death.
Premiums and Modes
- Level Premiums: Early premium charges are higher to cover the lower costs in later years; provides cost stability.
- Premium Mode: Policyowners can choose how often to pay premiums; annual payments are the least expensive.
- Interest and Administrative Costs: Quarterly payments incur higher total costs due to decreased interest for the insurer and increased administrative fees.
Common Disaster Clause
- In situations where both the insured and the beneficiary die simultaneously, proceeds typically go to the contingent beneficiary or estate based on specific timing of deaths.
Policyowner Rights
- Changing Beneficiary: Only the policyowner can change their life insurance beneficiary designation.
- Minor Beneficiary: Requires a guardian to ensure proper management of proceeds until the minor reaches adulthood.
Life Insurance Proceeds and Taxes
- Lump-Sum Payments: All proceeds paid to primary beneficiaries are typically income tax-free in the year received.
- Cash Surrender Value: The entire cash surrender value of a policy is not taxable upon death; only gains are taxable.
Life Settlement Contracts
- Policyowners can sell their whole life insurance policies for more than the cash value through life settlement contracts.
Policyholder Scenarios
- Accidental Death and Dismemberment (AD&D): Benefits go directly to the primary beneficiary unless they predecease the insured; then proceeds go to contingent beneficiary.
- If a co-primary beneficiary dies before the insured, the remaining co-primary can still receive the full benefit unless further contingencies exist.
Additional Notes
- Monthly Premiums: Generally higher than annual premium due to increased administrative costs.
- Convertible Policies: Decisions regarding changing from term to whole life should consider cost differences based on original or attained age.
- Income Tax Deductions: Personal life insurance premiums are generally not deductible for federal income tax purposes.
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Description
Test your knowledge on life insurance concepts including beneficiary designations and premium payments. This quiz covers key terms like irrevocable beneficiaries and modes of premium. Perfect for students or professionals in the insurance field.
