Ch 6
The life insurance company just paid a $100,000 death benefit to a beneficiary on the insured who died the cash value was $15,000 and the total premiums paid equal $10,000 how much of the proceeds will be added to the beneficiaries gross income for federal income tax purposes
0
A $50,000 whole life policy is surrendered and by the policy owner for the full cash value amount of $15,000 the policy owner had paid a total of $10,000 in premiums While the policy was active how much of the cash value is taxable
5000
A man dies and is insured my whole life insurance policy of $50,000 which has a cash value of $15,000 the primary beneficiary will receive how much
50000
All of the settlement options would satisfy the conditions of a spendthrift clause except
A lump sum payment
Which of these factors do not affect the life insurance premium rates
An insurers rating
which would be described as a beneficiary designation by class
Children of the insured
Which of these statements is incorrect regarding the federal income tax treatment of life insurance
Entire cash surrender value is taxable
Death benefits from a life insurance policy are normally considered to be
Exempt from federal income tax
Which life insurance settlement option pays a stated monthly amount until the proceeds are gone
Fixed amount option
Which settlement options make some minimum guarantee dollar payments over the stated number of years
Fixed period
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 of these occurrences could justify an insurer to reduce premiums
Interest factor increase
A policy owner would like to change the beneficiary on a life insurance policy and make the change permanentwhich type of a designation would fulfill this need
Irrevocable
A policy owners rights are limited under which beneficiary designation
Irrevocable
When a policy loan is requested by a policy owner and it requires the consent of the beneficiary what kind of beneficiary designation is this
Irrevocable beneficiary
Which life insurance settlement option pays lifetime benefits to two or more people
Joint and survivor
How much is normally paid to a policy owner in a life settlement
Less than the face amount
A method of financing life insurance which is best suited for individuals who are in a higher tax bracket is known az
Minimum deposit insurance
A policy owner is allowed to pay premiums more than once a year under which provision
Mode of Premium
Life insurance premiums are based on what three factors
Mortality interest expenses
Which statement is true regarding a minor beneficiary
Normally, a guardian is required to be appointed in the Beneficiary clause of the contract
The secondary beneficiary is described as the
Person who receives the death benefits if the primary beneficiary dies before the insured
A woman is insured on a variable life insurance policy with her husband named as primary beneficiary if there is no designated contingent beneficiary who will receive the policies proceeds if they both die in a common accident
Policy owners estate
On a life insurance policy who is qualified to change the beneficiary designation
Policyowner
A policy owner is able to choose the frequency of premium payments through which policy feature
Premium mode
T is covered by an accidental death and dismemberment policy that has a irrevocable beneficiary what action with the insurance company take if T request a change of beneficiary
Request of the change will be refused
Jay would like to maintain the right to change the beneficiaries which beneficiary designation should be used
Revocable
M purchased an accidental death and dismemberment policy and named his son as a beneficiary M has the right to change the beneficiary designation anytime what type of beneficiary is this son
Revocable
How long do most states allow an insurance company to delay the payment of a cash surrender under the delayed payment provision
Six months
Which of the following is considered a class beneficiary designation
Surviving children
After 15 years a whole life policy is surrender which of the following can the policy owner expect
Taxes are owed on the amount of cash value that exceeds the premiums paid
C is trying to determine whether to convert her convertible term life policy to whole life insurance using her original age or attained age what factor would affect her decision the most
The cost
The most important factor to consider when determining whether to convert term insurance at the insured's attained age for the insurance original age is
The cost
What is the underlying concept regarding level premiums?
The early years are charged more than what is needed
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
Which statement regarding the joint and survivor life insurance settlement option is incorrect
The income payments are larger than compared to a single-life income option
The economic benefit doctrine requires any benefit granted to an individual that has economic her financial value be included as compensation for income tax purposes in the
Year the benefit is granted
A level premium indicates
the premium is fixed for the entire duration of the contract
What percent of personal life insurance premiums is usually deductible for federal income tax purposes
0%
Which statement regarding the change of beneficiary provision is true
The policyowner can change the beneficiary
How much will be taxable if a policy owner age 55 relinquishes a universal life policy
Taxes are owed on the amount of cash value that exceeds the premiums paid
Which premium schedule results in the lowest cost to the policy owner
annual
When there is a name the beneficiary on a Life insurance policy the death benefits
are paid directly to the beneficiary without interference from the insured's creditors
