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Basic Principles Of Insurance > Exam Premiums, proceed and beneficiaries > Flashcards

Exam Premiums, proceed and beneficiaries Flashcards

1
Q

Proceeds from a life insurance policy are protected from the beneficiary creditors by which clause?

A

Spendthrift trust cause

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2
Q

Name a contingent beneficiary as all surviving children is described by which term?

A

Class designation

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3
Q

How does life insurance create an immediate estate

A

After the first premium is paid the face amount may be available to the beneficiary

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4
Q

A policy owner can receive an immediate payment before the insured dies by using

A

Viatical settlement contract

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5
Q

Which of the following is not an insurer policy expense

A

Premium

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6
Q

What happens to the total amount of premiums paid for an insurance policy when the payment frequency increases?

A

Increases

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7
Q

Which of the following is not a life insurance settlement option

A

Extended term option

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8
Q

How is the cost of the policy affected when a policy owner pays premiums more frequently

A

Increases

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9
Q

The premium payment mode that result in the highest overall cost would be

A

Monthly

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10
Q

Which of these affected by the frequency of insurance policy premium payments?

A

Cost

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11
Q

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?

A

Irrevocable

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12
Q

What would be an expense factor in insurance program?

A

Mortality costs

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13
Q

Which of these premium payments frequencies is not typically available to a policy owners

A

Bi-weekly

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14
Q

A life insurance claim which involves a per capita distribution of policy proceeds would be payable to the

A

Name living primary beneficiary

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15
Q

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

A

Mortality rate

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16
Q

A beneficiary changes can occur

A

Normally at any time doing the policy term

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17
Q

Which type of beneficiary should be named if the insured wants to give explicit directions on how the policy proceeds should be paid?

A

Individual

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18
Q

Insurance premiums is determined by each of the following factors except

A

Liquidity 

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19
Q

A tax free section 1035 exchange of insurance policy to a different policy is permitted if it occurs

A

From insurer to ensure earth and no cash is received by the policy owner

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20
Q

An example of naming a beneficiary by class would be

A

To the children born of my union with Ned Jackson

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21
Q

What does a life insurance policy guarantees to the state of beneficiary upon the death of the insured

A

Specific amount of money

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22
Q

Which of these is considered a major tax advantage of life insurance

A

Income tax is typically not owed on processed pay directly to a beneficiary

23
Q

A policyowner is prohibited from making any changes to the policy
without the beneficiary’s written consent under which beneficiary
designation?

A

Irrevocable beneficiary

24
Q

Over the course of a year, which premium payment mode is most
expensive?

A

Monthly

25
Q

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

A

Mortality 

26
Q

Which settlement option involves having the proceeds remain with the
insurer and earnings paid on a monthly basis to the beneficiary?

A

Interest only

27
Q

Which of these is the automatic mode of settlement for life insurance
policy proceeds?

A

Lump sum

28
Q

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

A

The insured estate

29
Q

What is created after policy proceeds are obtained in a lump sum and
then immediately invested?

A

Estate

30
Q

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

A

Dividends

31
Q

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?

A

Common disaster clause

32
Q

Which of these ensures that proceeds of a life insurance policy will be free
from attachment or seizure by the beneficiary’s creditors?

A

Spendthrift clause

33
Q

Purchasing a life insurance policy in order to avoid the forced sale of
assets upon death is called

A

Estate conservation

34
Q

A spendthrift clause in a life insurance policy

A

Restricted ability of the beneficiary to assign benefits

35
Q

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?

A

No federal income taxes owed on life insurance proceeds

36
Q

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

A

Mortality tables

37
Q

Which of these factors help determine an insured’s life insurance
premium?

A

Avocation (hobby)

38
Q

Level premium term life insurance policies

A

Have premiums that are average over the policy period

39
Q

Which of the following enables a life policy to be replaced with another
life policy and results in the postponement of the tax consequence?

A

Section 1035 exchange

40
Q

Which settlement option involves having the proceeds remain with the
insurer and earnings paid on a monthly basis to the beneficiary?

A

Interest only

41
Q

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?

A

Fixed amount

42
Q

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

A

Insurer expenses

43
Q

A policyowner can receive a percentage payment of the death benefits
prior to death by using what kind of contract?

A

Viatical settlement agreement

44
Q

Where would policy proceeds be paid if both the insured and primary
beneficiary were killed in the same accident?

A

Contingency beneficiary

45
Q

Mortality is calculated by using a large risk pool of

A

People and time

46
Q

All of these are settlement options for life insurance policies except

A

Extended term

47
Q

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

A

Exempt from federal income taxes

48
Q

What is the primary feature of a viatical settlement 

A

Reduce death benefit pre-payment

49
Q

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?

A

Interest option

50
Q

A beneficiary receives only the death benefit earnings in which
settlement option?

A

Interest option

51
Q

Tonya has replaced her whole life policy with an annuity without incurring
a tax penalty. This transaction is called a(n)

A

1035 exchange

52
Q

If the beneficiary dies from the same accident as the insured individual,
the insurer will proceed as if

A

The insured outlived The beneficiary

53
Q

Premiums are best described as

A



The amount and insurance per pays unit of coverage

Basic Principles Of Insurance (11 decks)

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