Which of these ensures that proceeds of a life insurance policy will be free?
Asked by: Dawson Hermiston | Last update: February 11, 2022Score: 4.6/5 (4 votes)
Which settlement option involves having the proceeds remain with the insurer and earnings paid on a monthly basis to the beneficiary? A Spendthrift Clause is a statement in a settlement agreement that indicates that the proceeds of the policy will be free from attachment or seizure by the beneficiary's creditors.
Which is an example of naming beneficiaries by class?
An example of naming a beneficiary by class would be? “To the children born of my union with Ned Jackson.”
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.
Who does the spendthrift clause in a life insurance policy protect?
The spendthrift clause gives the insurer the right to hold back the proceeds and protect the funds from creditors. 4 In this case, your insurer may prefer to pay the insurance money in installments to your son rather than as a lump sum.
What does a spendthrift clause mean?
A spendthrift clause refers to a clause creating a spendthrift trust which limits the ability of assets to be reached by the beneficiary or their creditors. ... Not every state recognizes spendthrift trusts, and the ones that do differ on allowing exceptions that allow creditors to gain trust assets in certain situations.
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Which of the following is true regarding the spendthrift clause in life insurance policies?
Which of the following is true regarding the spendthrift clause in life insurance policies? ... (The spendthrift clause in a life insurance policy prevents the beneficiary's reckless spending of benefits, and protects the policy proceeds from creditors of the beneficiary or policyowner.)
Who is the beneficiary in a life insurance policy quizlet?
Who are the named individuals or entities the policyowner designates to receive life insurance policy proceeds upon the insured's death? Beneficiaries are the named individuals or entities designated by the policyowner to receive the policy proceeds upon the insured's death. You just studied 10 terms!
How will life insurance proceeds that are paid as a lump sum received by the beneficiary?
The original benefit can be paid to a secondary beneficiary when the beneficiary dies. A lump-sum life insurance payout usually is tax-free. However, if you are paid in installments, a portion of those payments could be taxable. If you receive interest on your payments, that interest could be taxed as regular income.
What type of tax is associated with death proceeds from a life insurance policy quizlet?
Terms in this set (33) proceeds payable at death are usually income tax-free to the beneficiary. If benefits are paid on a qualified accelerated basis due to the insured's terminal illness, they are treated the same as the death benefit would be treated--i.e., they are not taxed.
What does a life insurance policy summary normally include?
A policy summary is an abbreviated overview of the key aspects of a life insurance policy. This can include the premium amounts, coverage limitations, conditions, and other details.
What is a beneficiary class?
Class A Beneficiary means any Beneficiary who owns a Class A Interest.
What does class of beneficiary mean?
A beneficiary can be designated as a specific beneficiary (a person identified by name and relationship) or a class beneficiary (a group of individuals such as “children of the insured”). ... Typically, insurers pay benefits to a legal guardian rather than to a minor.
What are the settlement options available for life insurance policies?
Read on for an overview of the six most common life insurance payout options. By the end, you'll have working knowledge of lump-sum payments, interest income payments, interest accumulation, fixed period and fixed amount payout, and the life-only settlement, also known as the life annuity.
What are settlement options in insurance?
Settlement Options — in life insurance, how proceeds are paid to the designated beneficiaries. Most life insurance policies provide for payment in a lump sum.
Which of the following settlements of a life insurance policy is taxable?
Which of the following settlements of a life insurance policy is taxable? Life benefits paid to a beneficiary are generally tax-free. However, with an interest-only settlement, installment payments are taxable because they are 100% interest earned on the principal.
Which of the following are common uses of life insurance proceeds?
- Paying final costs. Life insurance policy benefits can be used to help pay for final expenses after you pass away. ...
- Paying off debt or replacing income. ...
- Inheritance. ...
- Paying federal or state estate taxes. ...
- Charitable contributions. ...
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Is life insurance paid in a lump sum?
Lump-sum payments are the most common type of life insurance payouts. It is a large sum of money, paid out all at once instead of being broken up into installments. A lump-sum payment gives beneficiaries immediate access to the money, providing financial security quickly.
What is an insurance payment?
An insurance premium is the amount of money an individual or business pays for an insurance policy. Insurance premiums are paid for policies that cover healthcare, auto, home, and life insurance. ... It also represents a liability, as the insurer must provide coverage for claims being made against the policy.
What is the order in which beneficiaries receive proceeds from a life insurance policy quizlet?
The contingent, or secondary beneficiary is the next person (or class of persons) in line to receive the policy proceeds. Contingent beneficiaries receive the proceeds if the primary beneficiary is removed or dies before the insured.
Who is the beneficiary in a life insurance policy?
A beneficiary is the person or entity that you legally designate to receive the benefits from your financial products. For life insurance coverage, that is the death benefit your policy will pay if you die. For retirement or investment accounts, that is the balance of your assets in those accounts.
Who are the named individuals or entities the policyowner designates to receive life insurance policy proceeds upon the insured's death?
Beneficiaries are the named individuals or entities designated by the policyowner to receive the policy proceeds upon the insured's death.
Which of the following is true regarding the spendthrift clause in life insurance policies quizlet?
Which of the following is true regarding the spendthrift clause in life insurance policies? It can protect the policy proceeds from creditors of the beneficiary.
Which of the following is usually true of a participating life insurance policy?
Which of the following is usually true of a participating life insurance policy ? Pays dividends to the policy owners. An agent accepts a payment after 35 days it is due , telling the insured that there will not be a problem keeping the policy in force. This is an example of what type of agent authority ?
Which clause is the important clause of life insurance policy?
The revival clause acts as a win-win situation for the insurance company and the policyholder. If the life insurance policy lapses due to the non-payment of the premium amount, the revival clause allows the reinstatement of the policy.