Exam Premiums, proceed and beneficiaries Flashcards
Proceeds from a life insurance policy are protected from the beneficiary creditors by which clause?
Spendthrift trust cause
Name a contingent beneficiary as all surviving children is described by which term?
Class designation
How does life insurance create an immediate estate
After the first premium is paid the face amount may be available to the beneficiary
A policy owner can receive an immediate payment before the insured dies by using
Viatical settlement contract
Which of the following is not an insurer policy expense
Premium
What happens to the total amount of premiums paid for an insurance policy when the payment frequency increases?
Increases
Which of the following is not a life insurance settlement option
Extended term option
How is the cost of the policy affected when a policy owner pays premiums more frequently
Increases
The premium payment mode that result in the highest overall cost would be
Monthly
Which of these affected by the frequency of insurance policy premium payments?
Cost
Sharon is a policy owner of a $50,000 life insurance policy. Our son Mike, is a beneficiary. If Sharon must obtain Mike signature in order to change the beneficiary, what kind of beneficiary designation is this?
Irrevocable
What would be an expense factor in insurance program?
Mortality costs
Which of these premium payments frequencies is not typically available to a policy owners
Bi-weekly
A life insurance claim which involves a per capita distribution of policy proceeds would be payable to the
Name living primary beneficiary
Which of the following describes a number of deaths in a year compared to the number of people in a select group
Mortality rate
A beneficiary changes can occur
Normally at any time doing the policy term
Which type of beneficiary should be named if the insured wants to give explicit directions on how the policy proceeds should be paid?
Individual
Insurance premiums is determined by each of the following factors except
Liquidity 
A tax free section 1035 exchange of insurance policy to a different policy is permitted if it occurs
From insurer to ensure earth and no cash is received by the policy owner
An example of naming a beneficiary by class would be
To the children born of my union with Ned Jackson
What does a life insurance policy guarantees to the state of beneficiary upon the death of the insured
Specific amount of money
Which of these is considered a major tax advantage of life insurance
Income tax is typically not owed on processed pay directly to a beneficiary
A policyowner is prohibited from making any changes to the policy
without the beneficiary’s written consent under which beneficiary
designation?
Irrevocable beneficiary
Over the course of a year, which premium payment mode is most
expensive?
Monthly
When calculating life insurance premium rates, which component is
affected by an insured’s age and gender?
Mortality 
Which settlement option involves having the proceeds remain with the
insurer and earnings paid on a monthly basis to the beneficiary?
Interest only
Which of these is the automatic mode of settlement for life insurance
policy proceeds?
Lump sum
A creditor would be allowed rights to life insurance policy proceeds if
which of the following beneficiaries is chosen?
The insured estate
What is created after policy proceeds are obtained in a lump sum and
then immediately invested?
Estate
Which of the following is NOT a component of determining policy
premiums?
Dividends
Pat is insured with a life insurance policy and Karen is his primary
beneficiary. They are both involved in an automobile accident where Pat
dies instantly and Karen dies 5 days later. Which policy provision will
protect the rights of the contingent beneficiary to receive the policy
benefits?
Common disaster clause
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
Purchasing a life insurance policy in order to avoid the forced sale of
assets upon death is called
Estate conservation
A spendthrift clause in a life insurance policy
Restricted ability of the beneficiary to assign benefits
A beneficiary has just received a claim payment for a life insurance policy.
Which of the following is TRUE regarding the federal income tax lability
owed?
No federal income taxes owed on life insurance proceeds
The probability of death, listed by year, is demonstrated in
Mortality tables
Which of these factors help determine an insured’s life insurance
premium?
Avocation (hobby)
Level premium term life insurance policies
Have premiums that are average over the policy period
Which of the following enables a life policy to be replaced with another
life policy and results in the postponement of the tax consequence?
Section 1035 exchange
Which settlement option involves having the proceeds remain with the
insurer and earnings paid on a monthly basis to the beneficiary?
Interest only
Elizabeth is the beneficiary of a life insurance policy. She is receiving the
death benefit in nayments of $10,000 per month until the principal and
interest has been paid out. Which option was chosen?
Fixed amount
When calculating life insurance premium rates, which component would
an agent’s commission fall under?
Insurer expenses
A policyowner can receive a percentage payment of the death benefits
prior to death by using what kind of contract?
Viatical settlement agreement
Where would policy proceeds be paid if both the insured and primary
beneficiary were killed in the same accident?
Contingency beneficiary
Mortality is calculated by using a large risk pool of
People and time
All of these are settlement options for life insurance policies except
Extended term
How are death benefits that are received by a beneficiary normally
treated for tax purposes?
Exempt from federal income taxes
What is the primary feature of a viatical settlement 
Reduce death benefit pre-payment
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
A beneficiary receives only the death benefit earnings in which
settlement option?
Interest option
Tonya has replaced her whole life policy with an annuity without incurring
a tax penalty. This transaction is called a(n)
1035 exchange
If the beneficiary dies from the same accident as the insured individual,
the insurer will proceed as if
The insured outlived The beneficiary
Premiums are best described as

The amount and insurance per pays unit of coverage
