3 - Life Insurance Policies - Provisions, Options and Riders (Exam 2)

Which of these provisions require proof of insurability after a policy has lapsed? -Insuring -Conversion -Reinstatement -Consideration

-Reinstatement

T took out a $50,000 life insurance policy with an Accidental Death and Dismemberment rider. Five years later, T commits suicide. How much will the insurer pay? -The total premiums paid minus any policy loans -Nothing -$50,000 -$100,000

-$50,000

P purchases a $50,000 term life insurance policy in 2005. One of the questions on the application ask if P engages in scuba diving, to which P answers "No". The policy is then issued with no scuba exclusions. In 2010, P takes up scuba diving and dies in a scuba-related accident in 2011. What will the insurer pay to P's beneficiary? -Premiums paid plus interest -Nothing. Claim will be denied -$50,000 minus any outstanding policy loans -$100,000 because the cause of death was accidental

-$50,000 minus any outstanding policy loans

Which provision prevents an insurer from changing the terms of the contract with the policyowner by referring to documents not found within the policy itself? -Policy Exclusion -Incontestable -Entire Contract -Assignment

-Entire Contract The entire contract provision, found at the beginning of the policy, states that the policy document, the application (which is attached to the policy), and any attached riders constitute the entire contract. Nothing may be "incorporated by reference," meaning that the policy cannot refer to any outside documents as being part of the contract.

When an insurer issues a policy that refuses to cover certain risks, this is referred to as a(n) -elimination -exclusion -limitation -exception

-exclusion

In a Life insurance contract, an insurance company's promise to pay stated benefits is called the -Insuring clause -Consideration clause -Entire Contract -Owner's rights

-Insuring clause

Which of these is NOT considered to be a right given to a policyowner? -Surrendering the policy's cash value -Modify a provision in the insurance contract -Assignment of ownership -Change the beneficiary, if revocable

-Modify a provision in the insurance contract

S buys a $10,000 Whole Life policy in 2003 and pays an annual premium of $100. S dies 5 years later in 2008 and the insurer pays the beneficiary $10,500. What kind of rider did S include on the policy? -Accelerated death benefit rider -Return of premium rider -Family income rider -Term rider

-Return of premium rider

D was actively serving in the Marines when he was killed in an automobile accident while on leave. His $100,000 Whole life policy contains a War Exclusion clause. How much will D's beneficiary's receive? -Refund of premiums paid plus interest -Nothing, due to actively serving in the armed forces -Double the face amount because cause of death was accidental -The full face amount

-The full face amount

The Consideration clause in a life insurance policy indicates that a policyowner's consideration consists of a completed application and -the initial premium -agreeing to a physical examination -delivery of policy -disclosure of any medical conditions

-the initial premium

What does the insuring agreement in a Life insurance contract establish? -An insurer's basic promise -The insurance policy's grace period -An insurer's required reserve amount -The obligations of the beneficiary

-An insurer's basic promise

What action will an insurer take if an interest payment on a policy loan is not made on time? -cancel the policy if not paid within the grace period -automatically add the amount of interest due to the loan balance -subtract from any dividends owed -disallow any further loans

-automatically add the amount of interest due to the loan balance

The incontestable clause allows an insurer to -disallow a change of ownership throughout the Contestable period -disallow a change of beneficiary during the Contestable period -contest a claim at anytime if the cause of death was accidental -contest a claim during the contestable period

-contest a claim during the contestable period

B owns a Whole Life policy with a guaranteed insurability option that allows him to purchase, without evidence of insurability, stated amounts of -additional Term Life coverage at any time -additional Term Life coverage at specified intervals -additional Whole Life coverage at any time -additional Whole Life coverage at specified times

-additional Whole Life coverage at specified times

N is covered by a Term Life policy and does not make the required premium payment which was due August 1. N dies September 15. What action will the insurer take? -Claim will be denied -Claim will be paid in full -Claim will be partially paid -Claim will be decided by an arbitrator

-Claim will be denied