Life Premiums And Benefits

Question 1

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

Answer 1

Interest only

Question 2

A policy owner can receive an immediate payment before the insured dies by using a(n)

Answer 2

Viatical settlement contract

Question 3

An example of naming a beneficiary by class would be
A) to the children born of my union with Ned Jackson: David Jackson, Jennifer Jackson, and Scott Jackson
B) to the child born of my union with Ned Jackson: Scott Jackson
C) to the children born of my union with Ned Jackson
D) to Ned Jackson

Answer 3

C) To the children born of my union with Ned Jackson

Question 4

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

Answer 4

Monthly

Question 5

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

Answer 5

Individual

Question 6

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

Answer 6

Spendthrift trust clause

Question 7

How does life insurance create an immediate estate?

Answer 7

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

Question 8

A beneficiary change can occur

Answer 8

Normally at any time during the policy term

Question 9

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

Answer 9

Increases

Question 10

Naming a contingent beneficiary as “all surviving children” is described by which term?

Answer 10

Class designation

Question 11

Which of these is affected by the frequency of an insurance policy’s premium payments?
A) settlement options
B) cash value
C) death benefit
D) cost

Answer 11

D) cost

Question 12

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

Answer 12

Contingent beneficiary

Question 13

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

Answer 13

Increases

Question 14

A beneficiary has just received a claim payment for a life insurance policy. Which of the following is TRUE regarding the federal income tax liability owed?
A) a flat tax of 10% is owed on all proceeds
B) federal income tax is owed if proceeds exceed $250,000
C) no federal income tax is owed on life insurance proceeds
D) tax liability owed depends on the type of life insurance policy

Answer 14

C) no federal income tax is owed on life insurance proceeds

Question 15

What is the primary feature of a viatical settlement?

Answer 15

Reduced death benefit payment