Chapter Exam - Life Premiums and Benefits

J chooses a monthly premium payment mode on his Whole Life insurance policy. Which of these statements is correct?

The gross premium is higher on a monthly payment mode as compared to being paid annually

Quarterly premium payments increase the annual cost of insurance because

interest to the insurer is decreased while the administrative costs are increased

A policyowner's rights are limited under which beneficiary designation?

irrevocable

Who has the right to change a revocable beneficiary?

Policyowner

A policy is able to choose the frequency of premium payments through what policy feature?

Premium Mode

What is the underlying concept regarding level premiums?

The early years are charged more than what is needed

Which of the following statement is CORRECT regarding the tax treatment of a lump-sum payment paid to a life insurance policy's primary beneficiary?

All proceeds are income tax free in the year they are received

How would a contingent beneficiary receive the policy proceeds in an Accidental Death and Dismemberment (AD&D) policy?

If the primary beneficiary dies before the insured

Which settlement option pays a stated amount to annuitant, but no residual value to a beneficiary?

Life Income

A Whole life insurance policyowner does not wish to continue making premium payments. Which of the following enables the policyowner to sell the policy for more than its cash value

Life settlement contract

K is the insured and P is the sole beneficiary on a life insurance policy. Both are involved in a fatal accident where K dies before P. Under the Common Disaster provision, which of these statements is true?

Proceeds will be payable to K's estate if P dies within a specified time

J would like to maintain the right to change beneficiaries. Which beneficiary designation should be used?

Revocable

Which type of life insurance beneficiary requires his/her consent when a change of beneficiary is attempted by the policyowner?

Irrevocable Beneficiary

If the insured and primary beneficiary are both killed in the same accident and it cannot be determined who died first, where are the death proceeds to be directed under the Uniform Simultaneous Death Act?

Insured's contingent beneficiary

A policyowner is allowed to pay premiums more than once a year under which provision?

Mode of Premium

Which of these is NOT an element of Life Insurance premiums?

Morbidity rate