What would be an expense factor in an insurance program? (An immediate estate can be created because the face amount may be available to the beneficiary after the first premium is paid.) … (As the premium payment frequency increases, the total amount of premium paid for an insurance policy increases.)
What type of insurance creates an immediate estate?
Although there are many variables that come into play during the process of estate planning (hence the need for a professional estate planner), only life insurance creates an immediate estate. This means that the contract itself automatically dictates where the life policy benefit will go.
Where would policy proceeds be paid if both the insured and primary beneficiary were killed in the same accident?
The Act states that if the insured and primary beneficiary both die in the same accident and there’s no proof that the beneficiary actually outlived the insured, the life insurance policy proceeds are paid as if the primary beneficiary died first.
Which settlement option involves having the proceeds?
(The settlement option that allows proceeds to remain with the insurer and earnings to be paid to the beneficiary on a monthly basis is called interest only.)
Who does the spendthrift clause in a life insurance policy protect quizlet?
Spendthrift Clause: Prevents a beneficiary from recklessly spending benefits by requiring the benefits to be paid in fixed amounts or installments over a certain period of time. A spendthrift clause in a life insurance policy would have no effect if the beneficiary receives the proceeds as one lump sum payment.
What does it mean by life insurance creates an immediate estate?
“Life insurance creates an immediate estate“. This phrase means: When the insured dies, a death benefit is paid. Bob and Tom are partners in a business.
What happens when the owner of a life insurance policy dies?
A life insurance policy is no different. … At the death of an owner, the policy passes as a probate estate asset to the next owner either by will or by intestate succession, if no successor owner is named. This could cause ownership of the policy to pass to an unintended owner or to be divided among multiple owners.
What happens if your beneficiary dies with you?
Under California Probate Code §21110, if a named beneficiary dies before the Will-maker, the heirs (i.e. kindred/related by consanguinity) of the deceased beneficiary may, based on several requirements, inherit the gift in his/or her place. … The second requirement is that the Will can expressly provide otherwise.
What happens if the insured and beneficiary are both killed in the same accident?
Under the Uniform Simultaneous Death Act, if both insured and primary beneficiary are killed in the same accident and there is insufficient evidence to show who died first, policy proceeds will be paid as if the insured died last. In other words, the proceeds will be paid to the secondary or contingent beneficiary.
What is considered a major tax advantage of life insurance?
1. The death benefit is generally paid out income tax free. That’s a pretty straightforward advantage for your beneficiaries. Life insurance policy payouts can be pretty hefty and avoiding a major tax bite can be consequential.
What is the price of insurance for each exposure unit?
A rate is the price per unit of insurance for each exposure unit, which is a unit of liability or property with similar characteristics. For instance, in property and casualty insurance, the exposure unit is typically equal to $100 of property value, and liability is measured in $1,000 units.
What is the primary feature of viatical settlement?
(The primary feature of a viatical settlement is the prepayment of a reduced death benefit.)