Ch 6

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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


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