Life Insurance Premiums Quiz

Which would be described as a beneficiary designation by class?

Al surrenders his life insurance policy for its cash value. What is referred to as the total of the premiums paid into the policy minus total dividends received in cash or used to offset premiums?

How much is normally paid to a policyowner in a life (viatical) settlement?

A life insurance beneficiary died after receiving only six payments under the policy's life income settlement option. What happens with the remaining balance of the death proceeds?

Which statement regarding the joint and survivor life insurance settlement option is INCORRECT?

Which life insurance settlement option pays lifetime benefits to two or more people?

Which life insurance settlement option pays a stated monthly amount until the proceeds are gone?

Wyatt is shopping for life insurance and is mainly concerned with the policy's death benefit. Which index should he be looking at when making comparisons?

Beneficiary Designation and Types

Beneficiary designation by class refers to groups like "Children of the insured."
Other types include specific named beneficiaries and entities such as the insured's estate or tertiary beneficiaries.

Understanding Cost Basis in Life Insurance

Cost basis is the total premiums paid into a policy minus any dividends received as cash or used to offset premiums.
This term is significant when surrendering a life insurance policy for its cash value.

Life (Viatical) Settlements

Policyowners typically receive less than the face amount of the policy in a viatical settlement.
This payment is based on factors such as the total premiums paid plus interest but generally does not equate to the full face value.

Life Income Settlement Option

If a beneficiary dies after receiving initial payments from the life income settlement, the remaining balance of death proceeds is retained by the insurance company.
This outcome highlights the importance of planning for beneficiaries in life insurance policies.

Joint and Survivor Life Insurance

An incorrect statement regarding the joint and survivor option is that income payments are larger than those from a single-life income option.
This settlement option provides lifetime benefits to two or more individuals, with payments continuing until all beneficiaries have passed.

Life Insurance Settlement Options and Payments

The fixed amount option in life insurance pays a specified monthly amount until the proceeds are depleted.
Life income settlements can also come in different forms, catering to the varying needs of policyholders and beneficiaries.

Comparing Life Insurance Policies

To assess and compare life insurance policies focused on death benefits, the net payment cost index is crucial.
This index helps consumers understand the true cost of insurance over time regarding the benefits received.

Test your knowledge about life insurance principles, including beneficiary designations, policy surrenders, and cash values. This quiz will help you understand key terms and concepts related to life insurance policies. Perfect for students or anyone interested in the fundamentals of life insurance.