Section 5 Flashcards
A tax free Section 1035 exchange of a life insurance policy to a different policy is permitted if it occurs
A. In the same state as the original transaction
B. Within a 12 month period
C. From insurer to ensure and no cash is received by the policy owner
D. from Agent to Agent as long as the agents are licensed in the same line
From insurer to insurer and no cash is received by the policy owner
What is the primary feature of a viatical settlement?
A. No interest on policy loan
B. Reduced death benefit pre-payment
C. Longer contestable period.
D. Lower premiums.
Reduced death benefit pre-payment
How does life insurance create an immediate estate?
A. Cash value maybe borrowed upon at any time
B. Nonforfeiture options are immediately available.
C. The insured’s estate receives the death benefit.
D. After first premium is paid the face amount may be available to the beneficiary.
After first premium is paid, the face amount may be available to the beneficiary
Elizabeth is the beneficiary of a life insurance policy. She is receiving the death benefit in payment of $10,000 per month until the principal and interest has been paid out. Which option was chosen?
A. Fixed period
B. Fixed amount
C. Life income
D. Interest only.
Fixed amount
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
B. Group
C. Class
D. Estate
Individual
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”
To the children born of my union with Ned Jackson
A policy owner can receive a percentage payment of the death benefits prior to death by using what kind of contract?
A. Viatical settlement agreement
B. Funding medium agreement
C. Split dollar plan
D. Buy sell plan
Viatical settlement agreement
If the beneficiary dies from the same accident as the insured individual, the insurer will proceed as if
A. The insured outlived the beneficiary
B. The beneficiary outlived the insured
C. Both the insured and beneficiary died at the same time
D. The estate was listed as beneficiary
The insured outlived the beneficiary
Which of these is affected by the frequency of an insurance policy premium payments?
A. Settlement options
B. Cash value
C. Death benefit
D. Cost
Cost
A policy owner is prohibited from making any changes to the policy without the beneficiaries written consent under which beneficiary designation?
A. Contingent beneficiary
B. Tertiary beneficiary
C. Revocable beneficiary
D. Irrevocable beneficiary
Irrevocable beneficiary
A policy owner can receive an immediate payment before the insured dies by using a(n)
A. Viatical settlement contract
B. Buy sell arrangement
C. Adhesion agreement
D. Spendthrift plan
Viatical settlement contract
What is created after policy proceeds are obtained in a lump sum and then immediately invested?
A. Viatical settlement
B. Emergency fund
C. Lump sum fund
D. Estate
Estate
Which of these is considered a major tax advantage of life insurance?
A. Tax credits are available for life insurance premiums paid.
B. Annual earnings are tax free.
C. Premiums are tax deductible buy an employee if paid for by an employer.
D. Income tax is typically not owed on proceeds paid directly to a beneficiary.
Income tax is typically not owed on proceeds, paid directly to a beneficiary
The premium payment mode that results in the highest overall cost would be
A. Monthly
B. Quarterly
C. Semi annual
D. Annual
Monthly
How is the cost of a policy affected when a policy owner pays premiums more frequently?
A. Not affected
B. Increases
C. Decreases
D. Depends on the type of coverage
Increases
