5 - (Questions) Life Insurance Premiums, Proceeds, and Beneficiaries

Which of the following is NOT a life insurance settlement option?

Extended term option

How are death benefits that are received by a beneficiary normally treated for tax purposes?

Death benefits that are received by a beneficiary are generally exempt from federal income tax.

Which of the following describes the number of deaths in a year compared to the number of people in a select group?

The number of deaths during a year compared with the total number of persons exposed in the class is known as the mortality rate.

Pam is the primary beneficiary of a life insurance policy and wants to let the death benefit accumulate and receive only the monthly investment proceeds. Which settlement option should she choose?

In this situation, the beneficiary should select the interest option.

A creditor would be allowed rights to life insurance policy proceeds if which of the following beneficiaries is chosen?

Creditors have rights to life insurance policy proceeds when the beneficiary is the insured's estate.

Premiums are best described as

money paid by the insured to acquire a policy's benefits

The probability of death, listed by year, are demonstrated in

mortality tables

Which of the following is NOT a component of determining policy premiums?

Dividends are not a component when determining policy premiums.

When calculating life insurance premium rates, which component is affected by an insured's age and gender?

Mortality is the component of a life insurance premium that age and gender affects.

When calculating life insurance premium rates, which component would an agent's commission fall under?

The agent's commission is considered part of the insurer's expenses and is a component of the premium.