Unit 7 Flashcards
Sandra has a life insurance policy that states her husband, Gerald, is to receive the full death benefit. If he predeceases her, their 3 children are to share the benefit equally. If her husband and all 3 children predecease her, the benefit is payable to the First Community Church. All of the following statements are correct EXCEPT:
(A) Gerald is the primary beneficiary
(B) the 3 children are all secondary beneficiaries
(C) the First Community Church is the tertiary beneficiary
(D) the designation of the First Community Church can be contested by any of Sandra’s relatives who survive the children
(D) the designation of the First Community Church can be contested by any of Sandra’s relatives who survive the children
The beneficiary of Walter’s life insurance policy reads, “Children of the Insured.” Which of the following phrases best describes this type of beneficiary designation?
(A) Juvenile beneficiaries
(B) Class beneficiaries
(C) Generational beneficiaries
(D) Attractive nuisance beneficiaries
(B) Class beneficiaries
Which of the following statements is CORRECT?
(A) A per capita distribution is the most common method of distributing proceeds to beneficiaries.
(B) If a policyowner designates a per stirpes distribution of the proceeds, the designation becomes irrevocable once a beneficiary predeceases the policyowner.
(C) A per stirpes distribution means that a beneficiary’s share of a policy’s proceeds will be passed down to the beneficiary’s living child or children if the named beneficiary predeceases the insured.
(D) A per capita distribution ensures that an insured’s surviving family will share in the insurance proceeds.
(C) A per stirpes distribution means that a beneficiary’s share of a policy’s proceeds will be passed down to the beneficiary’s living child or children if the named beneficiary predeceases the insured.
If an irrevocable beneficiary dies before the policyowner, who of the following gains control of a life insurance policy with a reversionary irrevocable clause?
(A) Insured
(B) Irrevocable beneficiary’s children
(C) Policyowner
(D) Insurer
(C) Policyowner
Christine’s policy has a clause that reads as follows: “Should the primary beneficiary and the insured die in the same accident and the primary beneficiary fails to survive the insured by 14 days, it will be assumed that the beneficiary predeceases the insured.” Which of the following phrases best describes this clause?
(A) Secondary beneficiary provision
(B) Facility-of-payment provision
(C) Uniform Simultaneous Death Act
(D) Common disaster provision
(D) Common disaster provision
Kevin, the insured under a $200,000 life insurance policy, and his sole beneficiary, Lynda, are killed instantly in a car accident. Under the Uniform Simultaneous Death Act, to whose estate will the policy proceeds be paid?
(A) Lynda’s estate
(B) Kevin’s estate
(C) Both Kevin’s and Lynda’s estate, equally
(D) The proceeds will escheat to the estate
(B) Kevin’s estate
When a policyowner cannot exercise his rights of ownership without the policy beneficiary’s consent, the beneficiary is designated:
(A) vested
(B) contractual
(C) irrevocable
(D) primary
(C) irrevocable
Mr. Williams names his son John a beneficiary of his life insurance policy. What designation should he use if he wants to make sure that John’s children would receive John’s share of the life insurance policy proceeds should John predecease his father?
(A) Per capita
(B) All my children
(C) Per stirpes
(D) Grandchildren
(C) Per stirpes
What is the beneficiary designation that can only be changed with the beneficiary’s written agreement?
(A) Revocable beneficiary
(B) Wife of the insured
(C) Per stirpes
(D) Irrevocable beneficiary
(D) Irrevocable beneficiary
All of the following statements concerning a common disaster provision are correct EXCEPT:
(A) the provision activates when the insured and primary beneficiary die as a result of the same accident
(B) the provision stipulates that if the insured and primary beneficiary die in the same accident, it is presumed that the insured died last
(C) the provision gives a policyowner assurance that proceeds will be distributed according to the policyowner’s wishes
(D) the provision stipulates that if the primary beneficiary outlives the insured by more than 48 hours, hen the proceeds will be paid to the primary beneficiary’s estate
(D) the provision stipulates that if the primary beneficiary outlives the insured by more than 48 hours, hen the proceeds will be paid to the primary beneficiary’s estate
A clause that states that policy distributions payable to a beneficiary after the insured dies are not assignable or transferable and may not be attached in any way is called:
(A) a facility-of-payment clause
(B) a debtors protection clause
(C) a spendthrift trust clause
(D) an assignment clause
(C) a spendthrift trust clause
All of the following statements about facility of payment provisions are correct EXCEPT:
(A) they are often found in group life policies
(B) they permit an insurer to pay all or part of the proceeds to a party who is not named in the contract
(C) they are typically found in industrial policies
(D) they permit insurance proceeds to be paid to someone not named in the policy when the named beneficiary is a minor
(A) they are often found in group life policies
Mary names her husband, Rick, as primary beneficiary of her life insurance policy and her two children, Pam and Matt, as contingent beneficiaries. Rick dies in March. Pam and Matt are killed simultaneously in a car accident later that month. Hearing the news, Mary has a fatal heart attack. In this case, Mary’s life insurance proceeds will be paid:
(A) 1/2 to Rick’s estate and 1/4 each to Pam and Matt’s estates
(B) to Rick’s estate
(C) to Mary’s estate
(D) in equal shares to Rick, Pam, and Matt’s estates
(C) to Mary’s estate
All of the following statements about beneficiary designations are correct EXCEPT:
(A) when a charity is named beneficiary, the policyowner’s heirs cannot contest the gift
(B) minors cannot be named life insurance beneficiaries
(C) a business may be designated as a beneficiary
(D) when a trust is named beneficiary, a trustee will manage the insurance proceeds
(B) minors cannot be named life insurance beneficiaries
The method used today to change beneficiaries is known as:
(A) a recording method
(B) the beneficiary alteration method
(C) the assignment method
(D) the change of designation method
(A) a recording method
