Chapter Exam 5- Life Insurance Premiums, Proceeds, and Beneficiaries
A beneficiary receives only the death benefit earnings in which settlement option?
Interest option
What is the price of insurance for each exposure unit?
Rate
Which of these ensures that proceeds of a life insurance policy will be free from attachment or seizure by the beneficiary's creditors?
spendthrift clause
Premiums are best described as
the amount an insured pays per unit of coverage
A creditor would be allowed rights to life insurance policy proceeds if which of the following beneficiaries is chosen?
the insured's estate
How are death benefits that are received by a beneficiary normally treated for tax purposes?
Exempt from federal income taxes
which of these premium payment frequencies is not typically available to a policyowner?
bi-weekly
which of the following is NOT a component of determining policy premiums?
dividends
which of the following is NOT a life insurance settlement option?
extended term option
A tax-free Section 1035 Exchange of a life insurance policy to a different policy is permitted if it occurs
from insurer to insurer and no cash is received by the policyowner
which of these is considered a major tax advantage of life insurance?
income tax is typically not owed on proceeds paid directly to a beneficiary
when calculating life insurance premium rates, which component would an agent's commission fall under?
insurer's expenses
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?
interest option
Which settlement option involves having the proceeds remain with the insurer and earning paid on a monthly basis to the beneficiary?
interests only
A policyowner is prohibited from making any changes to the policy without the beneficiary's written consent under which beneficiary designation?
irrevocable
which of these is the automatic mode of settlement for life insurance policy proceeds?
lump-sum
when calculating life insurance premium rates, which component is affected by an insured's age and gender?
mortality
which of the following describes the number of deaths in a year compared to the number of people in a selected group?
mortality rate
The probability of death, listed by year, is demonstrated in
mortality tables
Mortality is calculated by using a large risk pool of
people and time
which of the following is NOT an insurer policy expense?
premiums
a spendthrift clause in a life insurance policy
restricts the ability of the beneficiary to assign benefits
