Premiums, Proceeds, and beneficiaries - Life insurance

A policyowner is allowed to pay premiums more than once a year under which provision? Insuring Consideration Payor Mode of Premium

mode of premium

What is the underlying concept regarding level premiums? Level premiums build cash value quicker in the early years The early years are charged more than what is needed The early years are charged less than what is needed Level premiums can only be paid annually

early years are charged more than what is needed

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? The proceeds which exceed the amount paid in premiums are taxable The proceeds are taxable only if the beneficiary's tax bracket has changed from the payout All proceeds are considered taxable income in the year they are received All proceeds are income tax free in the year they are received

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

Which premium schedule results in the lowest cost to the policyowner? Semi-annual Monthly Quarterly Annual

annual

Which of these statements is INCORRECT regarding the federal income tax treatment of life insurance? Premiums are normally not tax deductible Cash dividends are normally not taxed Entire cash surrender value is taxable Proceeds are received tax-free if there is a named beneficiary

entire cash surrender value is taxable

A policyowner would like to change the beneficiary on a Life insurance policy and make the change permanent. Which type of designation would fulfill this need? Revocable Contingent Irrevocable Primary

irrevocable

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

irrevocable

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 Proceeds will be divided equally between K's and P's estate Proceeds will be payable to K's estate if P dies within a specified time The courts will decide who will receive death benefits

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

Quarterly premium payments increase the annual cost of insurance because insurer risk exposure is greater interest to the insurer is increased while administrative costs are decreased mortality costs are greater interest to the insurer is decreased while the administrative costs are increased

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

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? Cash surrender Life settlement contract Buy-sell arrangement 1031 Exchange

life settlement contract

A policyowner's rights are limited under which beneficiary designation? Revocable Tertiary Contingent Irrevocable

irrevocable

Which settlement option pays a stated amount to an annuitant, but no residual value to a beneficiary? Interest Only Fixed Period Fixed Amount Life Income

life income

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 Person designated by the primary beneficiary's executor to receive policy proceeds Person designated by the state to receive policy proceeds in the event that the primary beneficiary dies Person designated by the insurance comapany to receive policy proceeds in the event that the primary beneficiary dies

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

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

revocable

A primary beneficiary has died before the insured in a life insurance policy. A contingent beneficiary is also named in the policy. Which of the following will occur when the insured dies? Proceeds will go to the primary beneficiary's estate Probate will decide who receives proceeds Proceeds will go to the contingent beneficiary Proceeds will go to the insured's estate

proceeds will go to 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 will be accepted only if in writing by the insured Change will be made only if premiums are paid current Change will be made immediately Request of the change will be refused

request of change will be refused

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 gross premium is lower on a monthly payment mode as compared to being paid annually The cash value from a life policy paid on a monthly basis builds quicker than one paid on an annual basis The face amount of a life policy paid on a monthly basis is higher than one paid on an annual basis

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

Which statement regarding the Change of Beneficiary provision is true? The beneficiary can only be changed with the consent of the insurer The policyowner can change the beneficiary The insured can change the beneficiary A beneficiary change is subject to underwriting procedures

policyowner can change the beneficiary

A level premium indicates: the premium is fixed for a period stated in the contract, then becomes variable the premium can only be changed with the consent of the insurer the premium stays level until the policy's renewal date the premium is fixed for the entire duration of the contract

premium is fixed for entire duration of contract

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 This clause provides the payment of proceeds to the beneficiary's estate The estate taxes in the insured's estate may be reduced The estate taxes in the beneficiary's estate may be reduced

provides the payment of proceeds to the insured's estate