Questions and Answers
A life insurance claim which involves a per capita distribution of policy proceeds would be payable to the?
Mortality is calculated by using a large risk pool of?
A policyowner is prohibited from making any changes to the policy without the beneficiary's written consent under which beneficiary designation?
Over the course of a year, which premium payment mode is most expensive?
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Naming a contingent beneficiary as 'all surviving children' is described by which term?
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How is the cost of a policy affected when a policyowner pays premiums more frequently?
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Proceeds from a life insurance policy are protected from the beneficiary's creditors by which clause?
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Which settlement option involves having the proceeds remain with the insurer and earnings paid on a monthly basis to the beneficiary?
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Which of these premium payment frequencies is not typically available to a policyowner?
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Which of the following enables a life policy to be replaced with another life policy and results in the postponement of the tax consequence?
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A beneficiary change can occur?
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If the beneficiary dies from the same accident as the insured individual, the insurer will proceed as if?
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An example of naming a beneficiary by class would be?
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Which of these is considered a major tax advantage of life insurance?
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Pat is insured with a life insurance policy and Karen is his primary beneficiary. They are both involved in an automobile accident where Pat dies instantly and Karen dies 5 days later. Which policy provision will protect the rights of the contingent beneficiary to receive the policy benefits?
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What happens to the total amount of premium paid for an insurance policy when the payment frequency increases?
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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?
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Which of these is affected by the frequency of an insurance policy's premium payments?
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Elizabeth is the beneficiary of a life insurance policy. She is receiving the death benefit in payments of $10,000 per month until the principal and interest has been paid out. Which option was chosen?
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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?
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What does a life insurance policy guarantee to the stated beneficiary upon the death of the insured?
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Purchasing a life insurance policy in order to avoid the forced sale of assets upon death is called?
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Study Notes
Life Insurance Claims and Beneficiary Designations
- A life insurance claim with per capita distribution is payable to named living primary beneficiaries.
- Irrevocable beneficiaries require written consent for any policy changes by the policyowner.
- "All surviving children" as contingent beneficiaries is a class designation.
Mortality and Premiums
- Mortality calculations are based on a large risk pool of people over time.
- Monthly premium payment mode is typically the most expensive over a year.
- Increased frequency of premium payments leads to higher overall policy costs.
Settlement Options
- Interest only settlement option maintains proceeds with the insurer while providing monthly earnings to the beneficiary.
- Fixed amount option disburses a specific amount until the principal and interest are exhausted.
Tax Advantages and Regulations
- Life insurance proceeds are generally not subject to federal income tax when paid directly to beneficiaries.
- Section 1035 exchanges allow policy replacement without tax consequences.
Beneficiary Changes and Rights
- Beneficiary changes can usually be made any time during the policy term.
- The common disaster clause ensures contingent beneficiaries are protected if both the insured and primary beneficiary die in the same accident.
Naming Beneficiaries
- Individual beneficiaries allow explicit directions for policy proceeds.
- Class designations simplify naming multiple beneficiaries (e.g., "children").
Estate Planning and Conservation
- Estate conservation aims to avoid forced asset sales upon death or at the time of estate settlement.
Frequency of Payments
- Higher premium payment frequencies result in increased total premiums over the policy's lifetime.
- Only monthly, quarterly, and semi-annual payment options are typically available to policyholders; bi-weekly is not standard.
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Description
Test your knowledge with these flashcards from XCEL Chapter 6. This quiz focuses on life insurance claims, mortality calculations, and key concepts necessary for understanding insurance policies. It's a great way to prepare for exams and enhance your insurance knowledge.
