chapter 4 quiz- life insurance premiums proceeds and beneficiaries Flashcards
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
P and Q are married and have three children. P is the primary beneficiary on Q’s Accidental death and dismemberment (AD&D) policy and Q’s sister R is the contigent beneficiary. P, Q and R are involved in a car accident and Q and R are killed instantly. the accidental
p only
which settlement option pays a stated amount to an annuitant, but no residual value to a beneficiary?
life income
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
a policyowner is able to choose the frequency of premium payments through what policy feature?
premium mode
who has the right to change a revocable beneficiary
policyowner
___________ of personal life insurance is usually deductible for federal income tax purposes.
0%
on a life insurance policy, who is qualified to change the beneficiary designation?
insurer
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.
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.
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.
A _________ beneficiary may be changed by the policyowner WITHOUT the consent of the beneficiary
revocable
which of the following statments is CORRECT regarding the tax treatment of a lump sum payment paid to a life insurance policy primary beneficiary
all proceeds are income tax free in the year they are received
which premium schedule results in the lowest cost to the policyowner?
annual
T and S are named co-primary beneficiaries on a $500,000 AD&D policy insuring their father. their mother was name contingent beneficiary. five years later, S dies of natural causes and the father is killed in a scuba accident shortly after. How much of the death benefit will the mover receive?
$0
the mother receives $0 because T is alive and the sole primary beneficiary, while the mother is still the contingent beneficiary.
What is the underlying concept regarding level premiums?
the early years are charged more than what is needed
how would a contingent beneficiary receive the policy proceeds in an AD&D policy?
if the primary beneficiary dies before the insured
when can a policyowner change a revocable beneficiary?
anytime
T is covered by an AD&D policy that has an irrevocable beneficiary. what action witll the insurance company take if T requests a change of beneficiary?
request of the change will be refused
which of these statements is INCORRECT regarding the federal income tax treatment of life insurance.
entire cash surrender value is taxable
a policyowner is able to choose the frequency of premium payments through what policy feature?
premium mode
which of the following best describes a contingent beneficiary
the person designated by the insured to receive policy proceeds in the event that the primary beneficiary dies before the insured.
which of the following best describes a contingent beneficiary
the person designated by the insured to receive policy proceeds in the event that the primary beneficiary dies before the insured.
quarterly premium payments increase the annual cost of insurance because
interest to the insurer is decreased while the administrative costs are increased
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
