Podcast
Questions and Answers
What is the term for a policyowner being prohibited from making changes to the policy without the beneficiary's written consent?
What is the term for a policyowner being prohibited from making changes to the policy without the beneficiary's written consent?
Where would policy proceeds be paid if both the insured and primary beneficiary were killed in the same accident?
Where would policy proceeds be paid if both the insured and primary beneficiary were killed in the same accident?
Contingent beneficiary
What does a life insurance policy guarantee to the stated beneficiary upon the death of the insured?
What does a life insurance policy guarantee to the stated beneficiary upon the death of the insured?
Specified amount of money
Which aspect is affected by the frequency of an insurance policy's premium payments?
Which aspect is affected by the frequency of an insurance policy's premium payments?
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Mortality is calculated by using a large risk pool of what?
Mortality is calculated by using a large risk pool of what?
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If the beneficiary dies from the same accident as the insured individual, what does the insurer consider?
If the beneficiary dies from the same accident as the insured individual, what does the insurer consider?
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What type of life insurance policies have premiums that are averaged over the policy period?
What type of life insurance policies have premiums that are averaged over the policy period?
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Over the course of a year, which premium payment mode is most expensive?
Over the course of a year, which premium payment mode is most expensive?
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An example of naming a beneficiary by class would be?
An example of naming a beneficiary by class would be?
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Naming a contingent beneficiary as 'all surviving children' is described by which term?
Naming a contingent beneficiary as 'all surviving children' is described by which term?
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A policyowner can receive a percentage payment of the death benefits prior to death by using what kind of contract?
A policyowner can receive a percentage payment of the death benefits prior to death by using what kind of contract?
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A tax-free Section 1035 Exchange of a life insurance policy to a different policy is permitted if it occurs under what conditions?
A tax-free Section 1035 Exchange of a life insurance policy to a different policy is permitted if it occurs under what conditions?
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What would be an expense factor in an insurance program?
What would be an expense factor in an insurance program?
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How does life insurance create an immediate estate?
How does life insurance create an immediate estate?
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Which type of beneficiary should be named if the insured wants to give explicit directions on how the policy proceeds should be paid?
Which type of beneficiary should be named if the insured wants to give explicit directions on how the policy proceeds should be paid?
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Which of these ensures that proceeds of a life insurance policy will be free from attachment or seizure by the beneficiary's creditors?
Which of these ensures that proceeds of a life insurance policy will be free from attachment or seizure by the beneficiary's creditors?
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What happens to the total amount of premium paid for an insurance policy when the payment frequency increases?
What happens to the total amount of premium paid for an insurance policy when the payment frequency increases?
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What is the primary feature of a viatical settlement?
What is the primary feature of a viatical settlement?
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Which of these is considered a major tax advantage of life insurance?
Which of these is considered a major tax advantage of life insurance?
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Study Notes
Life Insurance Key Concepts
- An irrevocable beneficiary designation requires written consent from the beneficiary for any policy changes.
- If the insured and primary beneficiary die in the same accident, proceeds are paid to the contingent beneficiary.
- A life insurance policy guarantees a specified amount of money to the beneficiary upon the insured's death.
Premium Payment Insights
- The cost of an insurance policy is influenced by the frequency of premium payments.
- Monthly premium payment mode is the most expensive option over one year.
- As premium payment frequency increases, the total amount of premium paid increases.
Mortality and Risk Pooling
- Mortality is assessed using a large risk pool of people and time to calculate risk.
Beneficiary Designation
- Class designation allows naming a beneficiary by class, such as "all surviving children."
- Naming an individual as a beneficiary provides explicit directions for payment distribution.
Financial Mechanisms and Agreements
- A viatical settlement agreement enables policyowners to receive a percentage of death benefits before death.
- A tax-free Section 1035 Exchange allows a life insurance policy to be transferred without cash exchange between insurers.
Immediate Estate Creation
- Life insurance creates an immediate estate, making the face amount available after the first premium payment.
Protection from Creditors
- The spendthrift clause in life insurance policies protects proceeds from attachment or seizure by creditors of the beneficiary.
Tax Advantages
- One major tax advantage of life insurance is that proceeds paid directly to a beneficiary are generally not subject to income tax.
Features of Life Insurance Policies
- Level premium term life insurance policies have averaged premiums over the policy duration.
- The primary feature of a viatical settlement includes the prepayment of a reduced death benefit.
Studying That Suits You
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Description
Test your knowledge on life insurance concepts from Chapter 5. This quiz covers important terms such as irrevocable beneficiaries and contingent beneficiaries. Reinforce your understanding of policy provisions and payouts.
