Life insurance - Chapter 6 Premiums, Proceeds, and Beneficiaries
Which of the following statement is CORRECT regarding the tax treatment of a lump-sum payment paid to the life insurance policy's primary beneficiary?
All proceeds are income tax free in the year they are recieved
Which premium schedule results in the lowest cost to the policyowner?
Annual
When can a policyowner change a revocable beneficiary?
Anytime
K has a life insurance policy where her husband is beneficiary and her daughter is contingent beneficiary. Under the common Disaster clause, if K and her husband are both killed in an automobile accident, where would the death proceeds be directed?
Daughter
Quarterly premium payments increase the annual cost of insurance because
Interest to the insurer is decreased while the administrative cost are increased
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
Which type of life insurance beneficiary requires his/her consent when a change of beneficiary is attempted by the policyowner?
Irrevocable
A whole life insurance policyowner does not wish to continue making premium payments. Which of the following enables the policyowner to sell the policy for more than its cash value?
Life Settlement contract
A policyowner is allowed to pay premiums more that once a year under which provision?
Mode of Premium
Which statement is true regarding a minor beneficiary?
Normally, a guardian is required to be appointed in the Beneficiary clause of the contract
Which of the following best describes a contingent beneficiary?
Person designated by the insured to receive policy proceeds in the event that the primary beneficiary dies before the insured.
K is the insured and P is the sole beneficiary on a life insurance policy. Both are involved in a fatal accident where K dies before P. Under the Common Disaster provision, which of these statements is true?
Proceeds will be payable to K's estate if P dies within a specified time
A primary beneficiary has died before the insured in a life insurance policy. A contingent beneficiary is also named in the policy. Which of the following will occur when the insured dies?
Proceeds will go to the contingent beneficiary
J would like to maintain the right to change beneficiaries. Which beneficiary designation should be used?
Revocable
The common Disaster clause provides that if both the insured and the sole name beneficiary were to die in a common accident, which of the following is true?
The clause provides the payment of the proceeds to the insured's estate
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 Change of Beneficiary provision is true?
The policyowner can change the beneficiary
A level premium indicates
The premium is fixed for the entire duration of the contract
Which settlement options pays a stated amount to an annuitant, but no residual value to a beneficiary?
life income