Chapter 4 Life Insurance Premiums Quiz
This flashcard set focuses on beneficiary designations (primary, contingent, revocable), settlement options, and provisions like common disaster. It also includes premium mode flexibility, highlighting key decision-making rights of policyowners.
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
Key Terms
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
P and Q are married and have three children. P is the primary beneficiary on Q’s Accidental death and dismemberment (AD&D) policy and Q’s sister R is the contigent beneficiary. P, Q and R are involved in a car accident and Q and R are killed instantly. the accidental
p only
which settlement option pays a stated amount to an annuitant, but no residual value to a beneficiary?
life income
K is the insured and P is the sole beneficiary on a life insurance policy. both are involved in a fatal accident where K dies before P. Under the common disaster provision, which of these statements is true?
proceeds will be payable to K’s estate if P dies within a specified time
a primary beneficiary has died before the insured in a life insurance policy. a contingent beneficiary is also named in the policy. which of the following will occur when the insured dies?
proceeds will go to the contingent beneficiary
a policyowner is able to choose the frequency of premium payments through what policy feature?
premium mode
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| Term | Definition |
|---|---|
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 |
P and Q are married and have three children. P is the primary beneficiary on Q’s Accidental death and dismemberment (AD&D) policy and Q’s sister R is the contigent beneficiary. P, Q and R are involved in a car accident and Q and R are killed instantly. the accidental | p only |
which settlement option pays a stated amount to an annuitant, but no residual value to a beneficiary? | life income |
K is the insured and P is the sole beneficiary on a life insurance policy. both are involved in a fatal accident where K dies before P. Under the common disaster provision, which of these statements is true? | proceeds will be payable to K’s estate if P dies within a specified time |
a primary beneficiary has died before the insured in a life insurance policy. a contingent beneficiary is also named in the policy. which of the following will occur when the insured dies? | proceeds will go to the contingent beneficiary |
a policyowner is able to choose the frequency of premium payments through what policy feature? | premium mode |
who has the right to change a revocable beneficiary | policyowner |
___________ of personal life insurance is usually deductible for federal income tax purposes. | 0% |
on a life insurance policy, who is qualified to change the beneficiary designation? | insurer |
J chooses a monthly premium payment mode on his whole life insurance policy. which of these statements is correct? | the gross premium is higher on a monthly payment mode as compared to being paid annually. |
J chooses a monthly premium payment mode on his whole life insurance policy. which of these statements is correct? | the gross premium is higher on a monthly payment mode as compared to being paid annually. |
J chooses a monthly premium payment mode on his whole life insurance policy. which of these statements is correct? | the gross premium is higher on a monthly payment mode as compared to being paid annually. |
A _________ beneficiary may be changed by the policyowner WITHOUT the consent of the beneficiary | revocable |
which of the following statments is CORRECT regarding the tax treatment of a lump sum payment paid to a life insurance policy primary beneficiary | all proceeds are income tax free in the year they are received |
which premium schedule results in the lowest cost to the policyowner? | annual |
T and S are named co-primary beneficiaries on a $500,000 AD&D policy insuring their father. their mother was name contingent beneficiary. five years later, S dies of natural causes and the father is killed in a scuba accident shortly after. How much of the death benefit will the mover receive? | $0 the mother receives $0 because T is alive and the sole primary beneficiary, while the mother is still the contingent beneficiary. |
What is the underlying concept regarding level premiums? | the early years are charged more than what is needed |
how would a contingent beneficiary receive the policy proceeds in an AD&D policy? | if the primary beneficiary dies before the insured |
when can a policyowner change a revocable beneficiary? | anytime |
T is covered by an AD&D policy that has an irrevocable beneficiary. what action witll the insurance company take if T requests a change of beneficiary? | request of the change will be refused |
which of these statements is INCORRECT regarding the federal income tax treatment of life insurance. | entire cash surrender value is taxable |
a policyowner is able to choose the frequency of premium payments through what policy feature? | premium mode |
which of the following best describes a contingent beneficiary | the person designated by the insured to receive policy proceeds in the event that the primary beneficiary dies before the insured. |
which of the following best describes a contingent beneficiary | the person designated by the insured to receive policy proceeds in the event that the primary beneficiary dies before the insured. |
quarterly premium payments increase the annual cost of insurance because | interest to the insurer is decreased while the administrative costs are increased |
a whole life insurance policyowner does not wish to continue making premium payments. which of the following enables the policyowner to sell the policy for more than its cash value? | life settlement contract |