The beneficiary of a life insurance policy is the person who is the recipient of funds following the death of the person insured. Question 5 options: True False
Added by Marcos A.
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A beneficiary is indeed the person or entity designated to receive the death benefit from a life insurance policy when the insured person passes away. Show more…
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-Ben has named Jerry as primary beneficiary of Ben's life insurance policy and Tom as the contingent beneficiary. In which of the following ways do the rights of Jerry differ from the rights of Tom? 1. If Jerry is living when Ben dies, Tom has no legal right to any of the life insurance lump-sum death proceeds. 2. The only circumstances under which Tom would have any legal right to the lump-sum death proceeds would be if Jerry predeceases Ben. a. 1 Only b. 2 Only c. Both 1 and 2
Jennifer S.
Universal life insurance combines elements from term and whole life insurance. Term policies provide a: Death benefit and a savings component Death benefit only Savings vehicle only Whole life policies provide a: Death benefit and a savings component with fixed rate features Savings vehicle only Death benefit and a savings component with variable rate features Universal policies provide a: Death benefit and a savings component with variable rate features Death benefit only Savings vehicle only To understand how universal premiums are allocated, consider the following example. Larry is a 40-year-old lawyer who just bought a universal life insurance policy to protect his two children (ages 11 and 13) in the event of his death. Each year, Larry chooses how much he would like to contribute to the policy, as shown in the first row of the following table. An administrative fee along with the cost of the death benefit (the portion of the policy) is the payment. The resulting amount goes into the pure insurance / savings added to / subtracted from cash-value (or portion of the policy). This money earns interest at a rate of savings / pure insurance market-based / fixed return. Based on the given information, calculate the amount that is added to the cash-value portion of the policy in each of the first three years. Year 1 Year 2 Year 3 Premium (Annual Contribution) $2,700 $2,200 $1,500 Administrative Fee 85 85 85 Cost of Death Benefit 100 100 100 Amount Added to Cash Value The cost of the death benefit portion of universal policies is only fixed for certain periods and rises with age, as is the case with life insurance policies. Suppose that in the 11th year of his policy, Larry's cost of death benefit term / whole has risen substantially. At the same time, he is helping to pay his mother's medical expenses after a major surgery and currently cannot afford to pay his life insurance premium. True or False: Under the terms of a standard universal policy, if Larry stops paying his premiums, then Larry's policy will be canceled, and the value of the cash portion will be paid out to him immediately. False True
Akash M.
1. In the family insurance market, people buy life insurance to protect survivors against what? a. the insured living too long b. the insured dying too soon c. natural disasters d. possible disability 2. In the family insurance market, what is life insurance usually purchased to replace? a. taking on risk b. long-term care c. replacing income lost from a disability d. the financial loss when a wage earner dies 3. For which of the following reasons do businesses often purchase life insurance? a. to start a new business b. to replace business income lost when a key employee dies c. to pay for the wedding expenses of executives' children d. to pay IRS liens 4. What should not be done with life insurance? a. sold strictly as an investment without regard to its death benefit component b. used by survivors to pay off existing debt c. used to pay ongoing living expenses of survivors d. used to pay for medical and funeral expenses of the deceased 5. What type of policy is different from a typical life insurance contract in that two lives are insured under the same policy? a. second-to-die b. participating c. nonparticipating d. whole life 6. What is the principal economic purpose of life insurance? a. to provide capital when needed at the insured's death b. to cancel policies c. to provide insurance protection on grandchildren d. to provide funding for alternate health care 7. What type of insurance is used to help businesses meet financial needs upon the death of a key employee? a. liability insurance b. life insurance c. casualty insurance d. medical insurance
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