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Worksheets4 - LIFE INSURANCE PREMIUMS, PROCEEDS AND BENEFICIARIES
Total questions: 35
Worksheet time: 18mins
Which of these life products is NOT considered interest-sensitive?
Modified Whole Life
Variable Universal Life
Interest Sensitive Whole Life
Variable Life
K is looking to purchase Renewable Term insurance. Which of these types of Term insurance may
be renewable?
Increasing
Decreasing
Adjustable
Level
Which of these statements describe a Modified Endowment Contract (MEC)?
Exceeds the maximum amount of premium that can be paid into a policy and still have it recognized
as a life insurance contract
Falls below the minimum amount of premium that can be paid into a policy and still have it recognized
as a life insurance contract
The 7-pay test is used to determine the minimum death benefit of the policy
The 7-pay test is used to determine the maximum death benefit of the policy
A Policyowner is able to choose the frequency of premium through what policy feature?
Consideration
Payor Benefit
Premium Mode
Assignment Provision
Which settlement option pays a stated amount to an annuitant, but no residual value to beneficiary?
Interest Only
Fixed Period
Fixed Amount
Life Income
If the insured and the 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?
Primary Beneficiary's Estate
Primary Beneficiary's Next of Kin
Insured's Estate
Insured Contingent Beneficiary
On a life insurance policy, who is qualified to change the beneficiary designation?
Peyer
Primary Beneficiary
Policyowner
Insurer
Who has the right to change a revocable beneficiary?
Beneficiary
Agent
Insurance Agency
Policyowner
Which premium schedule results in the lowest cost to the policyowner
Semi-annual
Monthly
Quarterly
Annual
K is the insured and P is the sole beneficiary on a life insurance policy. Both are involved a fatal accident where K dies before P. Under the Common Disaster provision, which of these statements is true?
Proceeds will be paid to P's estate
Proceeds will be divided equally between K's and P's estate
Proceeds will be payable to K's estate if P dies within a specified time
The courts will decide who will receive death benefits
Quarterly premiums payments increase the annual cost of insurance because
Insurer risk exposure is greater
Interest to the insurer is increased while administrative costs are decreased
Mortality costs are greater
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?
Cash surrender
Life settlement contract
Buy-sell arrangement
1031 Exchange
A (n)______beneficiary may be changed by the policyowner WITHOUT the consent of the beneficiary.
Revocable
Irrevocable
Tertiary
Replacement
Which type of life insurance beneficiary requires hi/her consent when a change of beneficiary is attempted by the policyowner?
Irrevocable beneficiary
Tertiary beneficiary
Primary beneficiary
Revocable beneficiary
When can a policyowner change a revocable beneficiary?
Anytime
After the consent of the current beneficiary
Never
Only a primary beneficiary dies
T is the policyowner for a Life Insurance policy with an irrevocable beneficiary designation. If T wishes to change the beneficiary, T must obtain permission from the
Payor
Agent
Beneficiary
Commissioner of Insurance
Which of these statements is INCORRECT regarding the federal income tax treatment of life insurance?
Premiums are normally not tax deductible
Cash dividends are normally not taxed
Entire cash surrender value is taxable
Proceeds are received tax-free if there is a named beneficiary
A policyowner is allowed to pay premiums more than once a year under which provision?
Insuring
Consideration
Payor
Mode of Premium
_____of personal life insurance premiums is usually deductible for federal income tax purpose
100%
75%
50%
0%
The Common Disaster clause provides that if both the insured and the sole named beneficiary were to die in a common accident, which of the following is true?
This clause provides the payment of proceeds to the insured’s estate
This clause provides the payment of proceeds to the beneficiary’s estate
The estate taxes in the insured’s estate may be reduced
The estate taxes in the beneficiary’s estate may be reduced
J would like to maintain the right to change beneficiaries. Which beneficiary designation should be
used?
Irrevocable
Contingent
Primary
Revocable
Which of these is NOT an element of life insurance premiums?
Mortality rate
Insurer’s expense
Interest credit
Morbidity rate
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 primary beneficiary’s estate
Probate will decide who receives proceeds
Proceeds will go to the contingent beneficiary
Proceeds will go to the insured’s estate
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
The gross premium is lower on a monthly payment mode as compared to being paid annually
The cash value from a life policy paid on a monthly basis builds quicker than one paid on an annual
basis
The face amount of a life policy paid on a monthly basis is higher than one paid on an annual basis
How would a contingent beneficiary receive the policy proceeds in an Accidental Death and Dismemberment (AD&D) policy?
If the beneficiary is a minor at the time of the insured’s death
If the primary dies before the insured
If the insured died of accidental causes
If the insured died of natural causes
T. is covered by an Accidental Death and Dismemberment (AD&D) policy that has an irrevocable beneficiary. What action will the insurance company take if T requests a change of beneficiary
Request will be accepted only if in writing by the insured
Change will be made only if premiums are paid current
Change will be made immediately
Request of the change will be refused
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
Person designated by the primary beneficiary’s executor to receive policy proceeds
Peron designated by the state to receive policy proceeds in the event that the primary beneficiary
dies
Person designated by the insurance company to receive policy proceeds in the event that the primary
beneficiary dies
What is the underlying concept regarding level premiums?
Level premiums build cash value quicker in the early years
The early years are charged more than what is needed
The early years are charged less than what is needed
Level premiums can only paid annually
P and Q are married and have three children. P is the primary beneficiary on Q’s Accidental Death and Dismemberment (AD&) policy and Q’s sister R is the contingent beneficiary. P, Q, and R, are involved in a car accident and Q and R, are killed instantly. The Accidental Death benefits will be paid to:
R’s estate
Q’s estate
P and Q’s estate
P only
M purchased an AD&D policy and named hi son as beneficiary. M has the right to change the beneficiary designation at any time. What type of beneficiary is his son?
Tertiary
Irrevocable
Revocable
Contingent
Which premium schedule results in the lowest cost to the policyowner?
Semi-annual
Monthly
Quarterly
Annual
Which statement is true regarding a minor beneficiary?
Normally, the death proceeds are required to be held in trust until the beneficiary reaches the age of
21
Normally, a guardian is required to be appointed in the Beneficiary clause of the contract
The minor must pay the debts of the insured’s estate before receiving any of the proceeds
The minor is entitled to receive the death proceeds immediately
T and S are named co-primary beneficiaries on a $500,000 Accidental Death and
Dismemberment policy insuring their father. Their mother was named contingent beneficiary. Five years later, S dies of natural caused and the father is killed in a scuba accident shortly afterwards. How much of the death benefit will the mother receive?
$1,000,000
$500,000
$250,000
$0
Which statement regarding the Change of Beneficiary provision is true?
The beneficiary can only be changed with the consent of the insurer
The policyowner can change the beneficiary
The insured can change the beneficiary
A beneficiary change is subject to underwriting procedures
A level premium indicates:
The premium is fixed for a period stated in the contract, then becomes variable
The premium can only be changed with the consent on the insurer
The premium stays level until the policy’s renewal date
The premium is fixed for the entire duration of the contract
