Over the course of a year, which premium payment mode is most expensive?
Monthly
Quarterly
Semi-Annually
Annually
Monthly
Sharon is the policyowner of a $50,000 life insurance policy. Her son, Mike, is the beneficiary. If Sharon MUST obtain Mike's signature in order to change the beneficiary, what kind of beneficiary designation is this?
Tertiary
Contingent
Revocable
Irrevoc
Irrevocable
Level premium term life insurance policies
build cash value in a separate account
automatically convert to permanent insurance at a predetermined date
automatically renew at predetermined dates
have premiums that are averaged over the policy period
have premiums that are averaged over the policy period
Which settlement option involves having the proceeds remain with the insurer and earnings paid on a monthly basis to the beneficiary?
interest only
dividends only
extended interest
fixed period
interest only
If the beneficiary dies from the same accident as the insured individual, the insurer will proceed as if
the insured outlived the beneficiary
the beneficiary outlived the insured
both the insured and beneficiary died at the same time
the estate was listed
the insured outlived the beneficiary
The premium payment mode that results in the highest overall cost would be
monthly
quarterly
semi-annual
annual
monthlymonthly
How does life insurance create an immediate estate?
Cash value may be borrowed upon at any time
Nonforfeiture options are immediately available
The insured's estate receives the death benefit
After first premium is paid, the face amount may be available t
After first premium is paid, the face amount may be available to the beneficiary
Naming a contingent beneficiary as "all surviving children" is described by which term?
Contingent designation
Primary designation
Class designation
Tertiary designation
Class designation
Which type of beneficiary should be named if the insured wants to give explicit directions on how the policy proceeds should be paid?
Individual
Group
Class
Estate
Individual
What is created after policy proceeds are obtained in a lump sum and then immediately invested?
Viatical Settlement
Emergency Fund
Lump Sum Fund
Estate
Estate
Purchasing a life insurance policy in order to avoid the forced sale of assets upon death is called
estate funding
capital withholding
capital gains
estate conservation
estate conservation
A policyowner is prohibited from making any changes to the policy without the beneficiary's written consent under which beneficiary designation?
Contingent beneficiary
Tertiary beneficiary
Revocable beneficiary
Irrevocable beneficiary
Irrevocable beneficiary
A policyowner can receive an immediate payment before the insured dies by using a(n)
viatical settlement contract
buy-sell arrangement
adhesion agreement
spendthrift plan
viatical settlement contract
An example of naming a beneficiary by class would be
"To the children born of my union with Ned Jackson: David Jackson, Jennifer Jackson, and Scott Jackson"
"To the child born of my union with Ned Jackson: Scott Jackson"
"To the children born of my union
To the children born of my union with Ned Jackson
A policyowner can receive a percentage payment of the death benefits prior to death by using what kind of contract?
Viatical settlement agreement
Funding medium agreement
Split dollar plan
Buy-sell plan
Viatical settlement agreement
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 benef
Common disaster clause
Which of these ensures that proceeds of a life insurance policy will be free from attachment or seizure by the beneficiary's creditors?
Spendthrift Clause
Protection Clause
Viatical Clause
Settlement Clause
Spendthrift Clause
Which of these is considered a major tax advantage of life insurance?
Tax credits are available for life insurance premiums paid
Annual earnings are tax free
Premiums are tax deductible by an employee if paid for by an employer
Income tax is typically not
Income tax is typically not owed on proceeds paid directly to a beneficiary
Where would policy proceeds be paid if both the insured and primary beneficiary were killed in the same accident?
primary beneficiary's estate
contingent beneficiary
insured's estate
children of the insured
contingent beneficiary
Mortality is calculated by using a large risk pool of
hobbies and time
people and time
family history and geographical area
insurance companies and agents
...
What would be an expense factor in an insurance program?
Premiums collected
Mortality costs
Opportunity costs
Investment interest
Mortality costs
How is the cost of a policy affected when a policyowner pays premiums more frequently?
Not affected
Increases
Decreases
Depends on the type of coverage
Increases
Proceeds from a life insurance policy are protected from the beneficiary's creditors by which clause?
protection clause
creditor clause
spendthrift trust clause
beneficiary trust clause
spendthrift trust clause
Which of these premium payment frequencies is not typically available to a policyowner?
Bi-weekly
Monthly
Quarterly
Semi-annual
Bi-weekly
Which of the following enables a life policy to be replaced with another life policy and results in the postponement of the tax consequence?
Section 1040 exchange
Section 1035 exchange
Nonforfeiture Option
Spendthrift Option
Section 1035 exchange
A tax-free Section 1035 Exchange of a life insurance policy to a different policy is permitted if it occurs
in the same state as the original transaction
within a 12 month period
from insurer to insurer and no cash is received by the policyowner
from agen
from insurer to insurer and no cash is received by the policyowner
The premium payment mode that results in the least overall cost would be
monthly
quarterly
semi-annual
annual
annual
Which of these is affected by the frequency of an insurance policy's premium payments?
Settlement options
Cash value
Death benefit
Cost
Cost
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 flat tax of 10% is owed on all proceeds
Federal income tax is owed if proceeds exceed $250,000
N
No federal income tax is owed on life insurance proceeds
What is the primary feature of a viatical settlement?
No interest on policy loans
Reduced death benefit prepayment
Longer contestable period
Lower premiums
Reduced death benefit prepayment
What does a life insurance policy guarantee to the stated beneficiary upon the death of the insured?
Policy Dividend
Specified amount of money
Policy's cash value
Funeral expense fund
Specified amount of money
What happens to the total amount of premium paid for an insurance policy when the payment frequency increases?
No difference in cost
Decreases
Increases
Depends on the type of coverage
Increases
Which of these factors help determine an insured's life insurance premium?
insured's salary
marital status
place of residence
avocation (hobby)
avocation (hobby)