Podcast
Questions and Answers
What is true about level premium term life insurance policies?
What is true about level premium term life insurance policies?
- Automatically renew at predetermined dates
- Automatically convert to permanent insurance at a predetermined date
- Have premiums that are averaged over the policy period (correct)
- Build cash value in a separate account
Insurance premium is determined by each of the following except:
Insurance premium is determined by each of the following except:
- Mortality
- Expenses
- Interest
- Liquidity (correct)
How does life insurance create an immediate estate?
How does life insurance create an immediate estate?
After the first premium is paid, the face amount may be available to the beneficiary.
An example of naming a beneficiary by class would be:
An example of naming a beneficiary by class would be:
Which clause ensures that proceeds from a life insurance policy will be free from attachment or seizure by the beneficiary's creditors?
Which clause ensures that proceeds from a life insurance policy will be free from attachment or seizure by the beneficiary's creditors?
Proceeds from a life insurance policy are protected from the beneficiary's creditors by which clause?
Proceeds from a life insurance policy are protected from the beneficiary's creditors by which clause?
A policyowner is prohibited from making any changes to the policy without the beneficiary's written consent under which beneficiary designation?
A policyowner is prohibited from making any changes to the policy without the beneficiary's written consent under which beneficiary designation?
Purchasing a life insurance policy in order to avoid the forced sale of assets upon death is called:
Purchasing a life insurance policy in order to avoid the forced sale of assets upon death is called:
A policyowner can receive an immediate payment before the insured dies by using a(n):
A policyowner can receive an immediate payment before the insured dies by using a(n):
All of these are settlement options for life insurance policies except:
All of these are settlement options for life insurance policies except:
What is the primary feature of a viatical settlement?
What is the primary feature of a viatical settlement?
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?
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?
If the beneficiary dies from the same accident as the insured individual, the insurer will proceed as if:
If the beneficiary dies from the same accident as the insured individual, the insurer will proceed as if:
Where would policy proceeds be paid if both the insured and the primary beneficiary were killed in the same accident?
Where would policy proceeds be paid if both the insured and the primary beneficiary were killed in the same accident?
What is created after policy proceeds are obtained in a lump sum and then immediately invested?
What is created after policy proceeds are obtained in a lump sum and then immediately invested?
Elizabeth is the beneficiary of a life insurance policy. She is receiving death benefit payments of $10,000 per month until the principal and interest has been paid out. Which option was chosen?
Elizabeth is the beneficiary of a life insurance policy. She is receiving death benefit payments of $10,000 per month until the principal and interest has been paid out. Which option was chosen?
Which type of beneficiary should be named if the insured wants to give explicit directions on how the policy proceeds should be paid out?
Which type of beneficiary should be named if the insured wants to give explicit directions on how the policy proceeds should be paid out?
Sharon is the policyowner of a $50,000 life insurance policy. Her son is the beneficiary. If Sharon must obtain his signature in order to change the beneficiary, what kind of beneficiary designation is this?
Sharon is the policyowner of a $50,000 life insurance policy. Her son is the beneficiary. If Sharon must obtain his signature in order to change the beneficiary, what kind of beneficiary designation is this?
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?
How is the cost of a policy affected when a policyowner pays premiums more frequently?
How is the cost of a policy affected when a policyowner pays premiums more frequently?
Which of these premium payment frequencies is not typically available to a policyowner?
Which of these premium payment frequencies is not typically available to a policyowner?
Which of these is affected by the frequency of an insurance policy's premium payments?
Which of these is affected by the frequency of an insurance policy's premium payments?
Which of these is considered a major tax advantage of life insurance?
Which of these is considered a major tax advantage of life insurance?
Which of these factors help determine an insured's life insurance premium?
Which of these factors help determine an insured's life insurance premium?
Pat is insured with a life insurance policy and Kat is his primary beneficiary. They are both involved in a car accident where Pat dies instantly and Kat dies 5 days later. Which policy provision will protect the rights of the contingent beneficiary to receive the policy benefits?
Pat is insured with a life insurance policy and Kat is his primary beneficiary. They are both involved in a car accident where Pat dies instantly and Kat dies 5 days later. Which policy provision will protect the rights of the contingent beneficiary to receive the policy benefits?
Tonya has replaced her whole life policy with an annuity without incurring a tax penalty. This transaction is called:
Tonya has replaced her whole life policy with an annuity without incurring a tax penalty. This transaction is called:
A beneficiary has just received a claim payment for a life insurance policy. Which of the following is true regarding the federal income tax liability owed?
A beneficiary has just received a claim payment for a life insurance policy. Which of the following is true regarding the federal income tax liability owed?
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?
Mortality is calculated by using a large risk pool of:
Mortality is calculated by using a large risk pool of:
A tax free Section 1035 Exchange of a life insurance policy to a different policy is permitted if it occurs:
A tax free Section 1035 Exchange of a life insurance policy to a different policy is permitted if it occurs:
The premium payment mode that results in the highest overall cost would be:
The premium payment mode that results in the highest overall cost would be:
A life insurance claim which involves a per capita distribution of policy proceeds would be payable to the:
A life insurance claim which involves a per capita distribution of policy proceeds would be payable to the:
Which settlement option involves having the proceeds remain with the insurer and earnings paid on a monthly basis to the beneficiary?
Which settlement option involves having the proceeds remain with the insurer and earnings paid on a monthly basis to the beneficiary?
What would be an expense factor in an insurance program?
What would be an expense factor in an insurance program?
Which of the following enables a life policy to be replaced with another life policy and results in the postponement of the tax consequences?
Which of the following enables a life policy to be replaced with another life policy and results in the postponement of the tax consequences?
What happens to the total amount of premiums paid for an insurance policy when the payment frequency increases?
What happens to the total amount of premiums paid for an insurance policy when the payment frequency increases?
A beneficiary change can occur:
A beneficiary change can occur:
Study Notes
Premiums and Proceeds Overview
- Level premium term life insurance policies build cash value and have averaged premiums throughout the policy period.
- Insurance premiums are affected by factors such as mortality, interest, and expenses, but not liquidity.
- Life insurance creates an immediate estate by making the face amount available to beneficiaries after the first premium is paid.
Beneficiary Designation
- Class beneficiary naming example includes specifying children born from a union.
- A Spendthrift Clause ensures that life insurance proceeds are protected from the beneficiary's creditors.
- Irrevocable beneficiaries require the policyowner to obtain written consent to make changes to the policy.
Policy Proceeds and Payments
- Estate conservation aims to prevent the forced sale of assets after death.
- Viatical settlement agreements allow policyowners to receive immediate payment before death.
- Settlement options for life insurance include lump sum and life income, but extended term is not included.
Tax and Cost Considerations
- Life insurance proceeds are not subject to federal income tax when paid to a beneficiary.
- Monthly premium payments usually result in higher total costs compared to annual payments.
- Factors influencing an insured's life insurance premium include avocation (hobby) rather than salary or marital status.
Claims and Provisions
- Contingent beneficiaries are paid if the primary beneficiary dies with the insured in a common disaster.
- Section 1035 Exchange allows for tax-free replacement of one life insurance policy with another.
- Per capita distribution of policy proceeds benefits named living primary beneficiaries equally.
Other Key Facts
- Mortality is evaluated based on a large risk pool of individuals over time.
- Class designations refer to naming contingent beneficiaries like "all surviving children."
- Changes in payment frequency directly influence the total amount of premiums paid for an insurance policy.
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Description
Test your knowledge on the concepts of level premium term life insurance and the factors determining insurance premiums. This quiz covers key terms and definitions, helping you understand essential insurance principles. Perfect for students and professionals alike!
