Chapter 6 life insurance premiums, proceeds and beneficiaries xcel
What percent of personal life insurance premiums is usually deductible for federal income tax purposes?
0%
Which of these factors do not affect life insurance premium rates
An insurers rating
Which statement regarding the change of beneficiary provision is true
The policyowner can change the beneficiary
D is the policyowner and insured for a $50,000 life insurance policy. The beneficiary is D's wife. D and his wife divorce and D remarries, transferring ownership of his policy to his new wife. If D dies without making any further changes, to whom will the policy proceeds be paid to?
ex-wife
How much is normally paid to a policy owner in a life (viatical) statement
Less than the Face amount
P and Q are married and have three children. P is the primary beneficiary on Q's Accidental Death and Dismemberment (AD&D) policy and Q's sister R is the contingent beneficiary. P, Q, and R are involved in a car accident and Q and R are killed instantly. The Accidental Death benefits will be paid to
P only
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 paid to P's estate
J would like to maintain the right to change beneficiaries. Which beneficiary designation should be used?
Revocable
A policyowners rights are limited under which beneficiary designation?
irrevocable
A man dies and is insured by A whole life insurance policy of $50,000 which has a cash value of $15,000. The primary beneficiary will receive how much
$50,000
A method of financing life Insurance which is best suited for individuals who are in higher tax bracket is known as
Minimum deposit insurance
An insured covered by life insurance has just died. What will happen if the primary beneficiary had already died before the insured and contingent beneficiary?
Proceeds will go to the contingent beneficiary
T is covered by an Accidental Death and Dismemberment (AD&D) policy that has an irrevocable beneficiary. What action will the insurance company take if T requests a change of beneficiary?
Request of the change will be refused
M purchased an Accidental Death and Dismemberment (AD&D) policy and named his son as beneficiary. M has the right to change the beneficiary designation at anytime. What type of beneficiary is his son?
Revocable
How much will be taxable as the policy owner age 85 relinquishes a universal life policy
Taxes are owed on the amount of cash value that exceeds the premiums paid
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 or normally considered to be
Exempt from federal income tax
Which of these occurrences would justify an insurer to reduce premiums
Interest factor increase
Which premium schedule results in the lowest cost to the policyowner?
annual
A life insurance company just paid a $100,000 death benefit to a beneficiary. When the insured 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
T and S are named co-primary beneficiaries on a $500,000 Accidental Death and Dismemberment policy insuring their father. Their mother was named contingent beneficiary. Five years later, S dies of natural causes and the father is killed in a scuba accident shortly afterwards. How much of the death benefit will the mother receive?
$0
A $50,000 whole life policy is surrendered by the policyowner 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
$5,000
Which tax is normally associated with death?
Federal estate tax
Which life insurance settlement option pays a stated monthly amount until the proceeds are gone
Fixed amount option
Which settlement option makes minimum guarantee dollar payments over a 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
If the insured and primary beneficiary are both killed in the same accident determine who died first where are the death proceeds to be directed into the uniform simultaneous death act?
Insureds contingent beneficiary
A policy owner would like to change the beneficiary on a life insurance policy and make the change permanent. Which type of designation what do you feel this need
Irrevocable
When a policy loan is required 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
Bird life insurance premium can be obtained by an applicant exhibiting all of these factors except
Living in the mountains
All of the settlement options would satisfy the conditions of a spendthrift clause except
Lump sum payment
A policy owner is allowed to pay premiums more than once a year under which provision
Made of Premium
What is considered a valid reason for an insurance refusal Toupee death benefits directly to a minor
Minors are normally not capable of handling money in a reasonable manner
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
Secondary beneficiary is described as the
Person who receives the death benefits if the primary beneficiary dies before the insured
On my wife insurance policy who is qualified to change the beneficiary designation
Policy owner
A woman is insured under a variable life insurance policy with her husband named as primary beneficiary. If there is no designated contingent beneficiary who will receive the policy proceeds if they both are in a common accident
Policy owners estate
A policy owner is able to choose the frequency of premium Payments through what policy feature
Premium Mode
How long do most states allow an insurance company to delay the payment of a cash surrender and are they 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 surrendered. Which of the following in the policy owner expect
Taxes are owed on the amount of cash value that exceeds the premiums paid
The most important Factor to consider when determining whether to convert term insurance at the insurance attained age or the insurance original age is
The cost
What is the underlying contact regarding level premiums
The early years are charge 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 as compared to a single-life income option
The economic benefit doctor and requires that any benefit granted to an individual that has economic or financial value be included as compensation for income tax purposes in the
Year the benefit is granted
When there is a named beneficiary on a life insurance policy the death benefits
are paid directly to the beneficiary without interference from the insured's creditors
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
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
A level premium indicates
the premium is fixed for the entire duration of the contract