Life Settlements and Insurance Policies Quiz
Explore life settlements and insurance policies with answers to common questions including valuation, buyers, regulation, and taxation.
#1
What is a life settlement?
A type of insurance policy
A financial transaction where a policyholder sells their life insurance policy to a third party
A government program for seniors
A medical examination for life insurance eligibility
#2
What is the primary reason someone might consider a life settlement?
To increase the death benefit of their policy
To get out of paying premiums
To receive a lump sum cash payment
To transfer the policy to a family member
#3
Which factor typically determines the value of a life settlement?
The policyholder's age and health
The number of beneficiaries
The policy's face value
The insurance company's reputation
#4
What is the 'life settlement broker' responsible for in the life settlement process?
Evaluating the policyholder's health
Negotiating the sale of the policy
Providing medical treatment
Issuing the life insurance policy
#5
What is the 'insurable interest' requirement in life settlements?
The policyholder must have a financial interest in the continued life of the insured
The policy must be insured for an indefinite period
The insurance company must have an interest in the policyholder's financial well-being
The insured must have an interest in their own life
#6
What is the 'two-year contestability period' in the context of life insurance policies?
A period during which the policyholder can contest the life settlement value
A period during which the insurance company can contest the policy's validity
A period during which the insured person can cancel the policy
A period during which the beneficiaries can contest the distribution of funds
#7
What is the viatical settlement industry related to?
Real estate transactions
Life insurance for pets
Selling life insurance policies of terminally ill individuals
Investing in mutual funds
#8
In a life settlement, who is the typical buyer?
The insurance company
The original policyholder
A third-party investor or company
The government
#9
What happens if the insured person outlives the life expectancy predicted during a life settlement?
The policy becomes void
The buyer receives additional payments
The buyer loses the investment
The insurance company takes back the policy
#10
How are life settlements regulated?
By federal law only
Through state regulations
By international agreements
There is no regulation for life settlements
#11
What is the key distinction between a life settlement and a viatical settlement?
The age of the insured
The health condition of the insured
The presence of beneficiaries
The type of insurance policy
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