Questions and Answers
A policyowner's rights are limited under which beneficiary designation?
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?
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?
Signup and view all the answers
What action will the insurance company take if T requests a change of beneficiary under an irrevocable beneficiary?
Signup and view all the answers
Under the Common Disaster provision, if K dies before P, where would the proceeds go?
Signup and view all the answers
What percent of personal life insurance premiums is usually deductible for federal income tax purposes?
Signup and view all the answers
What does a level premium indicate?
Signup and view all the answers
What factor would affect C's decision to convert her convertible term life policy the most?
Signup and view all the answers
Which beneficiary designation should J use to maintain the right to change beneficiaries?
Signup and view all the answers
Which statement is true regarding a minor beneficiary?
Signup and view all the answers
Why do quarterly premium payments increase the annual cost of insurance?
Signup and view all the answers
Which of the following best describes a contingent beneficiary?
Signup and view all the answers
Under the Common Disaster clause, if K and her husband both die in an accident, where would the death proceeds be directed?
Signup and view all the answers
Which type of life insurance beneficiary requires his/her consent when a change of beneficiary is attempted?
Signup and view all the answers
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.
Studying That Suits You
Use AI to generate personalized quizzes and flashcards to suit your learning preferences.
Description
Test your knowledge on Life Premiums and Benefits with these flashcards from Chapter 4. Understand key terms like irrevocable beneficiary and the Common Disaster clause. Perfect for students studying life insurance and related concepts.
