A Pilot Applies For Life Insurance

Question: Why do insurance costs tend to be higher with quarterly premium payments?

Answer: This happens because paying premiums quarterly typically leads to lower interest earnings for the insurance company and higher administrative expenses.

Question: What feature of an insurance policy allows the policyholder to decide how often they pay their premiums?

Answer: This is known as the “Premium Mode” feature.

Question: When considering converting a convertible term life insurance policy to a whole life policy, what is the main factor that influences the decision to use the original or attained age?

Answer: The primary consideration in this decision is the associated cost.

Question: What is accurate about the tax implications for a lump-sum payment to a life insurance policy’s main beneficiary?

Answer: The total amount received as a lump sum is not subject to income tax in the year it’s received.

Question: Which of the following best describes a contingent beneficiary?

Answer: This is a person chosen to receive the policy’s benefits if the primary beneficiary passes away before the policyholder.

Question: If M, who holds an AD&D policy, names his son as the beneficiary and retains the right to change this designation, what type of beneficiary is his son?

Answer: In this case, his son is a “Revocable” beneficiary.

Question: In a scenario where P and Q are married, with Q having an AD&D policy naming P as the primary beneficiary and Q’s sister R as the contingent beneficiary, who receives the benefits if Q and R are fatally injured in the same incident?

Answer: Under these circumstances, P would be the sole recipient of the Accidental Death benefits.

Question: What happens according to the Common Disaster clause if the insured and their only named beneficiary perish together in a shared accident?

Answer: In such an event, the Common Disaster clause ensures that the death benefits are directed to the estate of the insured.

Question: Under what condition in a policy can the policyholder opt to pay premiums more frequently than annually?

Answer: This is allowed under the “Mode of Premium” provision of the policy.

Question: In the case where the insured and the primary beneficiary die in the same incident and the order of their deaths is unclear, who receives the death benefits according to the Uniform Simultaneous Death Act?

Answer: The death benefits are then allocated to the insured’s contingent beneficiary.

Question: A pilot applies for life insurance. The insurer approves the application with a $10 additional monthly premium modification due to the risk involved. The pilot declines the additional premium modification. The insurer will likely then issue the coverage with a…

A. Aviation Exclusion

B. Graded Benefit

C. Disability Rider

D. Waiver of Premium

Answer: A. Aviation Exclusion

Question: A life insurance application may be rejected on the basis of all of these factors EXCEPT:

Answer:  Gender+

Question: Upon policy delivery a signed good health statement is requested from the applicant, Why would this be necessary?

Answer:  The initial premium was NOT submitted with the application.

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