Chapter 6 Life Insurance Proceed

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 equaled $10,000. How much of the proceeds will be added to the beneficiary's gross income for federal income tax purposes?

0

What percent of personal life insurance premiums is usually deductible for federal income tax purposes?

0

How long do most states allow an insurance company to delay the payment of a cash surrender under the Delayed Payment provision?

6 months

The highest mortality rate belongs to which group?

Age 70 males

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 and it cannot be determined who died first, where are the death proceeds to be directed under the Uniform Simultaneous Death Act?

Insured's contingent beneficiary

Which statement is INCORRECT about the interest-only settlement option in a life insurance policy?

Interest on proceeds must be paid by the beneficiar

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?

Irrevocable

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

Irrevocable

A policyowner is allowed to pay premiums more than once a year under which provision?

Mode of Premium

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's proceeds if they both die in a common accident?

Policyowner's estate

A policyowner is able to choose the frequency of premium payments through what policy feature?

Premium Mode

How much will be taxable if a policyowner, age 55, relinquishes a Universal Life policy?

Taxes are owed on the amount of cash value that exceeds the premiums paid

Which of the following statements about the installments for a fixed period settlement option in life insurance policies is NOT true?

The periodic payment amount is determined by the beneficiary's age

Al surrenders his life insurance policy for its cash value. The total of the premiums paid into the policy minus total dividends received in cash or used to offset premiums is referred to as the

cost basis