Podcast
Questions and Answers
A policyowner's rights are limited under which beneficiary designation?
A policyowner's rights are limited under which beneficiary designation?
- Revocable
- Primary
- Contingent
- Irrevocable (correct)
The Common Disaster clause provides that if both the insured and the sole named beneficiary were to die in a common accident, which of the following is true?
The Common Disaster clause provides that if both the insured and the sole named beneficiary were to die in a common accident, which of the following is true?
- Payment goes to the beneficiary
- Payment is divided among family
- Payment goes to the insured's estate (correct)
- Payment goes to a contingent beneficiary (correct)
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
A policyowner is able to choose the frequency of premium payments through what policy feature?
A policyowner is able to choose the frequency of premium payments through what policy feature?
What action will the insurance company take if T requests a change of beneficiary under an irrevocable beneficiary?
What action will the insurance company take if T requests a change of beneficiary under an irrevocable beneficiary?
Under the Common Disaster provision, if K dies before P, where would the proceeds go?
Under the Common Disaster provision, if K dies before P, where would the proceeds go?
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?
What does a level premium indicate?
What does a level premium indicate?
What factor would affect C's decision to convert her convertible term life policy the most?
What factor would affect C's decision to convert her convertible term life policy the most?
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?
Which statement is true regarding a minor beneficiary?
Which statement is true regarding a minor beneficiary?
Why do quarterly premium payments increase the annual cost of insurance?
Why do quarterly premium payments increase the annual cost of insurance?
Which of the following best describes a contingent beneficiary?
Which of the following best describes a contingent beneficiary?
Under the Common Disaster clause, if K and her husband both die in an accident, where would the death proceeds be directed?
Under the Common Disaster clause, if K and her husband both die in an accident, where would the death proceeds be directed?
Which type of life insurance beneficiary requires his/her consent when a change of beneficiary is attempted?
Which type of life insurance beneficiary requires his/her consent when a change of beneficiary is attempted?
Flashcards
Irrevocable Beneficiary
Irrevocable Beneficiary
Beneficiary designation that requires consent and signature from the named beneficiary for any changes.
Common Disaster Clause
Common Disaster Clause
Clause that presumes the beneficiary dies first in a shared accident, directing proceeds to the contingent beneficiary or insured's estate.
Revocable Beneficiary
Revocable Beneficiary
Beneficiary designation that allows the policyowner to change the beneficiary at any time without their permission.
Mode of Premium
Mode of Premium
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Level Premium
Level Premium
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Quarterly Premium Payments
Quarterly Premium Payments
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Conversion Cost
Conversion Cost
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Contingent Beneficiary
Contingent Beneficiary
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Guardian for Minor Beneficiary
Guardian for Minor Beneficiary
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Study Notes
Beneficiary Designations
- Irrevocable Beneficiary: Requires consent and signature from the named beneficiary before any changes can be made.
- Common Disaster Clause: If both the insured and sole beneficiary die in a common accident, the beneficiary is presumed to die first, directing proceeds to the contingent beneficiary or the insured's estate if no contingent is named.
- Revocable Beneficiary: Allows the policyowner to change the beneficiary at any time without needing permission from the beneficiary.
Premium Payment Provisions
- Mode of Premium: Allows policyowners to pay premiums more than once a year, enabling flexibility in payment frequency.
- Premium Mode: Lets the policyowner select the frequency of payments (monthly, quarterly, annually, etc.).
Insurance Policy Features
- Level Premium: Indicates that the premium remains fixed for the entire duration of the contract.
- Quarterly Premium Payments: Increase overall insurance costs due to decreased interest for the insurer and higher administrative expenses.
Conversion of Policies
- Cost is the primary factor influencing the decision to convert a convertible term life policy to whole life, particularly whether to use original age or attained age for calculations.
Beneficiary Considerations for Minors
- Insurers typically require that a guardian be appointed for minor beneficiaries in the policy's beneficiary clause to manage proceeds.
Tax Implications
- Personal life insurance premiums are generally NOT deductible for federal income tax purposes (0% deduction).
Contingent Beneficiaries
- A contingent beneficiary is designated to receive proceeds if the primary beneficiary dies before the insured, ensuring that the death benefits are allocated according to the policyowner’s wishes.
Policyowner Rights and Actions
- If a policyowner with an irrevocable beneficiary requests a change, the request will be refused without the beneficiary’s written consent.
- Under the Common Disaster clause, proceeds from a policy will be directed to a contingent beneficiary (e.g., daughter) if the insured and primary beneficiary (spouse) die simultaneously.
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