Life Insurance Premiums, Proceeds and Beneficiaries

No federal income tax is owed on life insurance proceeds

A beneficiary has just received a claim payment for a life insurance policy. Which of the following is TRUE regarding the federal income tax liability owed?

Viatical settlement agreement

A policyowner can receive a percentage payment of the death benefits prior to death by using what kind of contract?

viatical settlement contract

A policyowner can receive an immediate payment before the insured dies by using a(n)

from insurer to insurer and no cash is received by the policyowner

A tax-free Section 1035 Exchange of a life insurance policy to a different policy is permitted if it occurs

"To the child born of my union with Ned Jackson"

An example of naming a beneficiary by class would be

After first premium is paid, the face amount may be available to the beneficiary

How does life insurance create an immediate estate?

Increases

How is the cost of a policy affected when a policyowner pays premiums more frequently?

Class designation

Naming a contingent beneficiary as "all surviving children" is described by which term?

Common disaster clause

Pat is insured with a life insurance policy and Karen is his primary beneficiary. They are both involved in an automobile accident where Pat dies instantly and Karen dies 5 days later. Which policy provision will protect the rights of the contingent beneficiary to receive the policy benefits?

Spendthrift trust clause

Proceeds from a life insurance policy are protected from the beneficiary's creditors by which clause?

estate conservation

Purchasing a life insurance policy in order to avoid the forced sale of assets upon death is called

monthly

The premium payment mode that results in the highest overall cost would be

annual

The premium payment mode that results in the least overall cost would be

contingent beneficiary

Where would policy proceeds be paid if both the insured and primary beneficiary were killed in the same accident?

Spendthrift Clause

Which of these ensures that proceeds of a life insurance policy will be free from attachment or seizure by the beneficiary's creditors?

cost

Which of these is affected by the frequency of an insurance policy's premium payments?

Income tax is typically not owed on proceeds paid directly to a beneficiary

Which of these is considered a major tax advantage of life insurance?

Bi-weekly

Which of these premium payment frequencies is not typically available to a policyowner?

interest only

Which settlement option involves having the proceeds remain with the insurer and earnings paid on a monthly basis to the beneficiary?

Individual

Which type of beneficiary should be named if the insured wants to give explicit directions on how the policy proceeds should be paid?