Beneficiary Claim Payment Quiz and Flashcards

Questions and Answers

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:

Mortality

Expenses

Interest

Liquidity (correct)

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:

To the children born of my union with Ned Jackson Signup and view all the answers

Which clause ensures that proceeds from a life insurance policy will be free from attachment or seizure by the beneficiary's creditors?

Spendthrift Clause Signup and view all the answers

Proceeds from a life insurance policy are protected from the beneficiary's creditors by which clause?

Spendthrift Trust Clause Signup and view all the answers

A policyowner is prohibited from making any changes to the policy without the beneficiary's written consent under which beneficiary designation?

Irrevocable Signup and view all the answers

Purchasing a life insurance policy in order to avoid the forced sale of assets upon death is called:

Estate Conservation Signup and view all the answers

A policyowner can receive an immediate payment before the insured dies by using a(n):

Viatical Settlement Agreement Signup and view all the answers

All of these are settlement options for life insurance policies except:

Extended Term Signup and view all the answers

What is the primary feature of a viatical settlement?

Reduced death benefit payment Signup and view all the answers

What does a life insurance policy guarantee to the stated beneficiary upon the death of the insured?

Specified amount of money Signup and view all the answers

Over the course of a year, which premium payment mode is most expensive?

Monthly Signup and view all the answers

If the beneficiary dies from the same accident as the insured individual, the insurer will proceed as if:

The insured outlived the beneficiary Signup and view all the answers

Where would policy proceeds be paid if both the insured and the primary beneficiary were killed in the same accident?

Contingent Beneficiary Signup and view all the answers

What is created after policy proceeds are obtained in a lump sum and then immediately invested?

Estate Signup and view all the answers

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?

Fixed amount Signup and view all the answers

Which type of beneficiary should be named if the insured wants to give explicit directions on how the policy proceeds should be paid out?

Individual Signup and view all the answers

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?

Irrevocable Signup and view all the answers

A policyowner can receive a percentage payment of the death benefits prior to death by using what kind of contract?

Viatical Settlement Agreement Signup and view all the answers

How is the cost of a policy affected when a policyowner pays premiums more frequently?

Increases Signup and view all the answers

Which of these premium payment frequencies is not typically available to a policyowner?

Bi-weekly Signup and view all the answers

Which of these is affected by the frequency of an insurance policy's premium payments?

Cost Signup and view all the answers

Which of these is considered a major tax advantage of life insurance?

Income tax is typically not owed on proceeds paid directly to a beneficiary Signup and view all the answers

Which of these factors help determine an insured's life insurance premium?

Avocation Hobby Signup and view all the answers

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?

Common Disaster Clause Signup and view all the answers

Tonya has replaced her whole life policy with an annuity without incurring a tax penalty. This transaction is called:

1035 Exchange Signup and view all the answers

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?

No federal income tax is owed on life insurance proceeds Signup and view all the answers

Naming a contingent beneficiary as 'all surviving children' is described by which term?

Class Designation Signup and view all the answers

Mortality is calculated by using a large risk pool of:

People and Time Signup and view all the answers

A tax free Section 1035 Exchange of a life insurance policy to a different policy is permitted if it occurs:

From insurer to insured and no cash is received by the policyowner Signup and view all the answers

The premium payment mode that results in the highest overall cost would be:

Monthly Signup and view all the answers

A life insurance claim which involves a per capita distribution of policy proceeds would be payable to the:

Named living primary beneficiaries Signup and view all the answers

Which settlement option involves having the proceeds remain with the insurer and earnings paid on a monthly basis to the beneficiary?

Interest Only Signup and view all the answers

What would be an expense factor in an insurance program?

Mortality costs Signup and view all the answers

Which of the following enables a life policy to be replaced with another life policy and results in the postponement of the tax consequences?

Section 1035 Exchange Signup and view all the answers

What happens to the total amount of premiums paid for an insurance policy when the payment frequency increases?