5. Life Insurance Policy Provisions, Options and Riders

Yes, since the suicide was committed long after the restricting period

An insured purchased a life policy, and then committed suicide 5 years later. Will the company pay the death benefit to the beneficiary?

Pay a reduced death benefit

An insurer has discovered a representation on a life insurance policy application regarding the insured's age. The insured is 10 years older than he stated on the application. __ is what the insurer will do in regards to the death benefit

Primary Beneficiary

Beneficiary designation that has first claim to the death proceeds of a life insurance policy

A promise to pay policy benefits

Consideration on the part of the insurer is __

Purpose of settlement options

Determines how the death benefit will be paid to the beneficiary

Paid-up additions

Dividend option that can increase the death benefit of the existing life policy

Lump-sum payment

If a settlement option is not chosen by the policy owner or the beneficiary, the __ option will be used

The longer the period selected, the smaller each installment will be

In the fixed-period settlement option, the number of installments for the death benefit proceeds determine the amount of installments by __

Incontestability

Life insurance policy provision that prevents an insurer from disputing or denying a claim due to misstatements on the application after a certain period of time

Entire contract

Life insurance policy provision that states that both the policy and a copy of the application form the contract between the policy owner and the insurer

Other-insured rider

Life insurance policy rider that provides coverage on the insured's family members

Waiver of premium

Life policy rider that allows the company to forgo collecting the premium if the insured becomes disabled

Extended term

Nonforfeiture option that is automatically selected by the company if not chosen by the policyowner

Reduced paid-up

Nonforfeiture option that provides coverage for the longest period of time

Grace period

Provision in a life insurance policy that extends coverage beyond the premium due date

Reinstatement

Provision that allows the policy owner to reactivate a lapsed life insurance policy within a specified period of time with proof of insurability

Grace Period

Required provision that protects against unintentional policy lapse

Absolute assignment

Requires transfer of all ownership rights in the policy to a third party

Representations

Statements made by the applicant that are true to the best of the applicant's knowledge

Settlement options

Term used to describe settlement methods of payment of the death benefit to the beneficiary upon the insured's death.

The contingent beneficiary

The common disaster clauses protects __

Determine how the death benefit will be paid to the beneficiary

The purpose of settlement options in life insurance policies is

Prevent the unintentional lapse of policy because of nonpayment of the premium

The purpose of the Automatic Premium Loan provision is __.

Cash surrender, reduced paid-up, extended term

The three nonforfeiture options in life insurance policies

A copy of the original insurance application

To meet the requirement of the entire contract policy provision, an insurance policy must contain __

Revocable

Type of beneficiary that can be changed at any point by the policyowner

Cash surrender

Under __ nonforfeiture option, the company pays the policy's surrender value and has no further obligations to the policyowner

When the primary beneficiary dies before the insured

A contingent beneficiary will receive a death benefit from a life insurance policy when...

It may alter the underwriting decision

A misrepresentation would be considered material when __

When the suicide is committed within a specified period of time after the policy is purchased

An insurance company can use suicide as a defense against paying a claim when __

Applying it to the next year's premium

With reduction of premium dividend option, the dividend is used by __

Double Indemnity

When an insurer pays a benefit of twice the face amount

Policy proceeds are retained by the insurance company & only the interest is paid to the beneficiary

With the interest only settlement option, __ happens to the policy's death benefit

Lump-sum, fixed period, fixed amount, life income, interest only

__ are settlement options that are available in life insurance policies.

Representations

__ are statements on the application made by an applicant for a life insurance policy

Policyowner

__ controls changes in premium payments, face values, and loans in a life insurance policy

Cash value is converted to the same face amount as in the whole life policy

__ happens to a policy's cash value under an extended term nonforfeiture option

Policyowner

__ has the right to the cash value of a life insurance policy

If the beneficiary dies shortly after the payments begin, the balance of the principal will be forfeited

__ is the disadvantage of selecting the life income settlement option

The balance of the principal will be forfeited if the beneficiary dies after payments

__ is the disadvantage of selecting the life income settlement option

Allow the insured to return the policy with a full refund

__ is the purpose of a free-look period

War, hazardous occupation, and aviation

___ are the most common exclusions in life insurance policies

The beneficiary

___ does not have to have insurable interest in the insured

Policy premium will be set according to the insured's original age

___ is the advantage of reinstating a life insurance policy as opposed to applying for a new one