5/3 Quiz – Flashcards

Beneficiaries are the named individuals or entities designated by the policyowner to receive the policy proceeds upon the insured's death. The correct answer is: Beneficiaries

Under the Uniform Simultaneous Death Act, the death benefit is paid as if the primary beneficiary died first. If Philip's children predeceased him, then his estate would receive the death benefit. The correct answer is: Philip's children from his prior marriage

The Uniform Simultaneous Death Act states that if the insured and the primary beneficiary are in a common accident or died simultaneously, the policy proceeds will be paid as if the primary beneficiary died first, in which case the policy proceeds are paid to the insured's contingent beneficiaries or to the insured's estate. The correct answer is: Policy proceeds are paid as if the primary beneficiary died first.

The guardian, trust and insurance company holding the proceeds are all options if a minor is a beneficiary. The correct answer is: The benefits can go directly to the estate of the insured.

The spendthrift clause is used to prevent creditors from seizing life insurance policy proceeds, provided there is at least one named beneficiary, excluding the insured's estate. The correct answer is: Spendthrift clause

By naming a beneficiary as irrevocable, that person effectively becomes a co-owner of the policy. In this case, that is not what the policyowner needs. The policyowner should name his spouse as a revocable beneficiary. The correct answer is: Revocable beneficiary

If the primary beneficiary does not outlive the insured by the number of days specified in the policy's common disaster clause, then the insured's estate receives the death benefit. The correct answer is: Requires the primary beneficiary to outlive the insured by a certain number of days in order to receive the death benefit in a common disaster between the insured and the primary beneficiary

The class designation allows all members of a group with a set of common traits to be beneficiaries of a life insurance policy. The correct answer is: Class designation

The policy owner must have the consent of the irrevocable beneficiary to borrow from the cash value. The correct answer is: Policy owners can borrow from cash value without consent.

Alice is the policyholder and Walter is the primary beneficiary. Alexander is the contingent beneficiary. The correct answer is: The primary beneficiary is Walter and Alexander is the contingent beneficiary.

The contingent beneficiary receives the proceeds if the primary beneficiary dies before the insured. The correct answer is: Contingent beneficiary

In the case of a revocable beneficiary, the policyowner can change the beneficiary with or without their knowledge and consent. The correct answer is: The policyowner cannot change the beneficiary without their knowledge.

Under the Uniform Simultaneous Death Act, the death benefit is paid as if the primary beneficiary died first. If Raquel's children predeceased her, then her estate would receive the death benefit. The correct answer is: Raquel's children from her prior marriage

More than one beneficiary may be named in a life insurance policy. The correct answer is: Only one beneficiary may be named.

Revocable beneficiaries do not have any rights of ownership, whereas irrevocable beneficiaries have ownership rights. The correct answer is: Roberta should name Marvin as a revocable beneficiary.

Taking care when specifying beneficiary designations will help to minimize the potential for conflicts, confusion and/or litigation when the insured dies. The correct answer is: All of the above

Simon is the primary beneficiary and will receive the policy proceeds. If Simon predeceased Abigail and Bob, then Stacey would receive the policy proceeds. If both Simon and Stacey predeceased Abigail and Bob, then Terry would receive the policy proceeds. The correct answer is: Simon

The beneficiary may be a person or a legal entity. One or more beneficiaries may be named. As part of ownership rights, the policyowner names the beneficiary or beneficiaries. The correct answer is: The beneficiary does not need to have an insurable interest in the life of the insured.

A trust can be named as the beneficiary. In this scenario, the policyowner (grantor) gives the legal title of the insurance policy to another person _ the trustee for the benefit of the trust beneficiary. Legally, the trustee cannot benefit from the trust, but is paid to manage the property on behalf of the trust beneficiary. The advantage of naming a trust is that it is a secure way to establish a scholarship fund, give money to an institution, or to assure that policy proceeds are disbursed exactly as the policyowner intends. The correct answer is: Trust

The insured's creditors have no right to the proceeds of the policy. The creditors of the beneficiary, however, could have rights to the proceeds. The correct answer is: None

The uniform simultaneous death act solves the problem of determining who receives the policy proceeds if the insured and the primary beneficiary are killed at the same time due to a common accident. The correct answer is: Uniform simultaneous death act

Usually the policy will stipulate that the primary beneficiary needs to survive the insured by 15 _ 30 days to collect policy proceeds. The correct answer is: 15 _ 30 days

Life insurance beneficiary designation options are: individuals, classes of individuals (per capita and per stirpes), estates, minors, trusts, and by succession (primary, contingent, and tertiary). Beneficiaries may be classified as revocable or irrevocable. The correct answer is: None of the above

To change a beneficiary on a life insurance policy, the policyholder must contact the insurer, by mail, phone or endorsement. Stating the designation in a will does not constitute a legal change of beneficiary. The correct answer is: Designating him/her as a beneficiary in the policyholder's will

Sometimes a tertiary beneficiary is named and would receive the face amount of the policy if the contingent (or secondary) beneficiary predeceased the insured. The correct answer is: The tertiary receives the benefit if the contingent beneficiary predeceases the insured.

Irrevocable beneficiaries have the right of assignment. If an irrevocable beneficiary makes an assignment but predeceases the insured, then the assignment is cancelled, unless it was made in writing or the policyowner agrees to the assignment in writing. The correct answer is: Irrevocable

Margaret is the primary beneficiary and will receive the policy proceeds. If Margaret predeceased John and Maria, then Terry would receive the policy proceeds. If both Margaret and Terry predeceased John and Maria, then Jean would receive the policy proceeds. The correct answer is: Margaret

If the insured and the primary beneficiary die at the same time, the proceeds would be paid to the contingent beneficiary. If there were no contingent beneficiary, then the proceeds would go to Ricardo's estate. The correct answer is: The proceeds go to the contingent beneficiary.

Under the per stirpes beneficiary designation, a deceased beneficiary's children will receive the portion of the proceeds the beneficiary would have received if alive at the time of the insured's death, regardless of whether the beneficiary's children are adopted, stepchildren or the natural children of the beneficiary. The correct answer is: Muriel will receive $100,000, Adam's children each receive $50,000 and Adrian will receive $100,000.

Drawbacks of naming a trust as a life insurance beneficiary include the high costs of administering a trust and the trust beneficiary's inability to intercede if the trustee is not managing the trust correctly. The correct answer is: High costs of administering a trust