Chapter 5 exam questions

Kevin has an existing life insurance policy and assigns it to another insured for a new contract. How would this transaction be treated for tax purposes? A. As a section 1035 exchange B. As a transfer C. As a rollover D. As a section 1040 exchange

A

The highest mortality rate belongs to which group? A. Age 60 females B. age 70 males C. age 60 males D. Age 70 females

B

The life insurance policies contingent beneficiary is the A. Primary person who receives the death benefits if the insured dies B. Person who receives the death benefits if the primary beneficiary does before the insured C. Person who receives the death benefits if there is no named beneficiary D. Person whose approval is needed before a beneficiary designation is changed

B

What effect does interest income have a pond insurance premiums? A. Increases premium B. Decreases premium C. Levels the premium D. Adjusts premium on a quarterly basis

B

What would be a valid reason for naming a trust as the beneficiary of the life insurance policy as opposed to naming an individual? A. Avoiding probate B. Management of proceeds would be provided C. Trustee can pay off any existing policy loans D. More settlement options available with the trustee

B

Which life insurance policy provision prohibits a beneficiary from commuting encumbering withdrawing or assigning any portion of the proceeds prior to actual receipt from the company? A. Insuring clause B. Spendthrift clause C. Nonforfeiture provision D. Collateral provision

B

Who is the beneficiary in a life insurance policy? A. The person designated to have control over the nonforfeiture options B. The stated person or entity who is designated to receive the death proceeds C. Person responsible for payment of the policy premiums D. The stated person whose life is insured in the insurance contract

B

Why do shopping for life insurance and is mainly concerned with the policies death benefit. Which index should he be looking out with making comparisons? A. Net gain index B. Net payment cost index C. Cost surrender index D. Guaranteed renewable index

B

A terminally ill policyholder decides to sell his life insurance policy discount to help support his family this sale is called A. Accelerated death benefit B. Assignment C. Vatical settlement D. Non-forfeiture option

C

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? A. Collateral beneficiary B. Revocable beneficiary C. Irrevocable beneficiary D. Per stripes beneficiary

C

Which of these occurrences could improve and ensures ability to reduce premiums? A. Expense factor increase B. Mortality rates increase C. Rate of earnings on investments increase D. Requiring monthly premium payments instead of annual

C

Which tax is normally associated with an individual's death? A. Excise tax B. consumption tax C. federal estate tax D. ad Valorem tax

C

Do you is discovered by an accidental death and dismemberment policy that has an irrevocable beneficiary. What action will the insurance company take if you request a change of beneficiary? A. Request will be excepted only if in writing by the insured B. Change will be made only if premiums are paid current C. Change will be made immediately D. Request of the change will be refused

D

The policy owner fell behind on the premium payments of a whole life policy and now is the grace period. How much will the beneficiary receive if the insured dies during his grace. In the policy also contains an outstanding policy loan? A. Full face amount B. For face amount minus the past due premium C. Face amount minus the loan balance D. Face amount minus alone balance and past due premium

D

When there is a named beneficiary on the life insurance policy the death benefits A. Are you directed to a trustee if the insured has any outstanding debts B. Are paid directly to the insured through creditors with any remaining balance forwarded to the beneficiary C. Are paid directly to the beneficiary minus any debt claims by the insured creditors D. Or paid directly to the beneficiary with out interference from the insured's creditors

D