XCEL Chapter Exam - Life Premiums and Benefits

which of these statements is incorrect regarding the federal income tax treatment of life insurance?

Entire cash surrender value is taxable

which of the following statements 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

What is the underlying concept regarding level premiums?

The early years are charged more than what is needed

Quarterly premium payments increase the annual cost of insurance because

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

Which premium schedule results in the lowest cost to the policyowner?

annual

On a life insurance policy, who is qualified to change the beneficiary designation?

policyowner

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

revocable

a level premium includes

the premium is fixed for the entire duration of the contract

which of the following best describes a contingent beneficiary?

Person designated by the insured to receive policy proceeds in the event that the primary beneficiary dies before the insured

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

The common disaster clause provides that if both the insured and the sole named beneficiary were to die in a common accident, which of the following is true?

This clause provides the payment of proceeds to the insured's estate

T is the policyowner for a Life Insurance policy with an Irrevocable beneficiary designation. If T wishes to change the beneficiary, T must obtain permission from the

beneficiary

K has a life insurance policy where her husband is beneficiary and her daughter is contingent beneficiary. Under the Common Disaster clause, if K and her husband are both killed in an automobile accident, where would the death proceeds be directed?

daughter

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

irrevocable beneficiary

which of these is not an element of life insurance premiums?

morbidity rate