Premiums, Proceeds, Beneficiaries Quiz Flashcards
Which of the following statements is correct regarding the tax treatment of a lump sum payment paid to a life insurance policy’s primary beneficiary?
All proceeds are income tax free in the year that they are received
Which of these is not an element of life insurance premiums?
Morbidity rate
When can a policy owner change a revocable beneficiary?
Anytime
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
Which type of life insurance beneficiary requires his or her consent when a change of beneficiary is attempted by the policy owner?
Irrevocable
And irrevocable designation may not be changed without the written consent of the beneficiary
How would a contingent beneficiary receive the policy proceeds in an accidental death and dismemberment (AD&D) policy?
If the primary beneficiary dies before the insured
A policy owner 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 primary beneficiary has died before the insured in a life insurance policy. A contingent beneficiary is also named on the policy. Which of the following will occur when the insured dies?
Proceeds will go to the contingent beneficiary
T is the policy owner for a life insurance policy with an irrevocable beneficiary designation. If T wishes to change the beneficiary, T must obtain the permission from:
Beneficiary
Which of these statements is incorrect regarding the federal income tax treatment of life insurance?
Entire cash surrender value is taxable
If the insured and primary beneficiary are both killed in the same accident, and it cannot be determined, who died first, where are the death proceeds to be directed under the uniform simultaneous death act?
Insured’s contingent beneficiary
T is covered by an accidental death and dismemberment policy that has an irrevocable beneficiary. What action will the insurance company take if T requests a change of beneficiary?
Request of the change will be refused
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
Jay would like to maintain the right to change beneficiaries. Which beneficiary designation should be used?
Revocable
P and Q are married and have three children. P is the primary beneficiary on Q’s accidental death and dismemberment policy and Q’s sister R is the contingent beneficiary. P, Q, & R are involved in a car accident accident, and Q and R are killed instantly. The accidental death benefits will be paid to:
P only
