Chapter 4 Exam: Premiums, Proceeds and Beneficiaries

Which is incorrect regarding the federal income tax treatment of life insurance?

Entire cash surrender value is taxable

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

Quarterly premium payments increase the annual cost of insurance because...

Interest to the insurer is decreased while administrative costs are increased

T is the policy owner for a life policy with an irrevocable beneficiary. If T wishes to change the beneficiary. T must obtain permission from the

Beneficiary

When can a policy change a revocable beneficary?

Anytime

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

On a life insurance policy, who is qualified to change the beneficiary designation?

The Policyowner

______% of personal life insurance premiums is usually deductible for federal income tax purposes

0

Which of the following is correct regarding the tax treatment of a lump-sum payment paid to a life insurance policy's primary beneficiary?

All proceeds are income tax-free in the year they are recieved

A policyowner's rights are limited under which beneficiary designation?

Irrevocable Beneficary

A policy-owner is able to choose the frequency of premium payments through which policy feature?

Premium Mode

Which type of life beneficiary requires his/her consent when a change of beneficiary is attempted by the policyowner?

Irrevocable Beneficiary

Which settlement option pays a stated amount to an annuitant, but no residual value to a beneficiary?

Life Income

A whole life insurance policy owner does not wish to continue making premium payments. Which of the following enables the policy owner to sell the policy for more than its cash value?

Life Settlement Contract

A policy-owner is allowed to pay premiums more than once a year under which provision

Mode of Premiums

Which of these is NOT an element of Life Insurance premiums?

Morbidity Rate

Which statement is true regarding a minor beneficiary?

Normally, the death proceeds will not come until a guardian is appointed in the beneficiary clause of the contract

Which best describes contingent beneficiary?

Person designated by the insured policy proceeds in the event that the primary beneficiary dies before the insured

The common disaster clause which provides that if both the insured and the sole beneficiary were to die in a common accident, which of the following is true?

Provides proceeds to the insured's estate

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

Revocable Beneficary

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 policy. Which of these statements is correct?

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

A level premium indicate:

The premium is fixed for the duration of the contract

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 AD&D policy and named his son as beneficiary. M has the right to change beneficiary designated of anytime. What type of beneficiary is his son?

Revocable Beneficary

A(n)________ beneficiary may be changed by the policy owner without the consent of the beneficiary

Revocable Beneficiary