CA LAH Ch 6

For the Accidental Death Benefit to be payable, the death must be solely caused by an accident, and the death must have occurred within ____ days of the accident.

90

For the accidental death benefit to be payable, the death must be solely caused by an accident, and the death must have occurred within ____ days of the accident.

90

Which of the following best describes a return of unused premiums to a policyowner from a whole life insurance contract? A. A cash surrender B. A capitalized refund C. A flat rate D. A dividend

A dividend

Each of the following events would be paid as a death benefit or principal sum on an AD&D policy rider except:

A fireman suffers a fatal heart attack while playing basketball with his teenage son.

What type of assignment process is used when an individual sells their life insurance contract to a viatical settlement company?

Absolute

When a policyowner sells their insurance policy to a Viatical Settlement Company, what type of assignment has occurred?

Absolute

Which of the following riders does not provide a benefit for a living insured? A. Payor rider B. Waiver of premium rider C. Accelerated benefits rider D. Accidental death benefit

Accidental death benefit

Mutual companies may pay dividends to their policyowners. Which of the following is a dividend option?

Cash Reduce Future Premium Accumulate At Interest All the above

Participating (par) or mutual companies may pay dividends to their policyowners. Which of the following is a dividend option?

Cash Reduce future premium Accumulate at interest All the above

Which rider below could be called an "inflation offset"?

Cost of Living rider

Which of the following riders adjusts the death on a life insurance contract, as an inflation offset?

Cost of living

The life insurance settlement option which pays benefits (principal and interest) for a pre-determined period of time best describes:

Fixed Period

If a beneficiary is most concerned with a stated dollar amount of benefit each month, rather than the length of time the benefit will be made, they will probably select which of the following settlement options?

Fixed amount

The settlement option which pays principal and interest until proceeds are exhausted is called: A. Fixed amount option B. Life with period certain option C. Fixed premium option D. Interest only

Fixed amount option

"Income for the life of the policyowner" could be used to describe which of the following settlement options?

Life income

Which of the following settlement options does not provide for a predetermined amount of income? A. Fixed period B. Fixed amount C. Life income D. Lump sum

Life income

Permanent insurance plans include various options available to the policyowner. What whole life insurance policy options protect a policyowner against an unintentional coverage lapse? A. Endowment option B. Settlement option C. Dividend option D. Non-forfeiture option

Non-forfeiture option

Which of the following policy riders would waive the premium payment obligation on a policy covering a 9-year-old girl whose parents are tragically killed in an automobile accident?

Payor rider

Which of the following policy riders would waive the premium payment obligation on a policy covering a child, whose parents are unable to pay the required premium due to their death or disability?

Payor rider

A life insurance dividend may be paid on a participating policy. Which of the following dividend options can be used when the policyowner is interested in minimizing his outlay of funds? A. Paid-up additions B. Reduced paid-up insurance C. Accumulate at interest D. Reduce the premium

Reduce the premium

Which of the following non-forfeiture options will continue to provide a permanent form of protection with a smaller face amount or death benefit?

Reduced paid-up

All of the following are dividend options available in a participating life insurance policy, EXCEPT: A. Reduce the premium B. Reduced paid-up insurance C. Cash D. Paid-up additions

Reduced paid-up insurance

All of the following are types of dividend options, EXCEPT: A. Paid-up additions B. Reduced paid-up insurance C. Accumulate at interest D. One-year term insurance

Reduced paid-up insurance

When an insured dies, his or her beneficiary may select any of several settlement options in which to receive the policy proceeds. Each of the following is an available life insurance settlement option, EXCEPT: A. Life income B. Fixed amount C. Interest only D. Reduced paid-up insurance

Reduced paid-up insurance

Nonforfeiture Values in a whole life insurance policy may be used when a policyowner surrenders the contract. One option available is the reduced paid-up insurance option. The amount of insurance that one may purchase under this option is based upon the insured's attained age and which of the following? A. The amount of the dividend B. The surrender charges C. The amount of the cash value D. The policy proceeds

The amount of the cash value

Viatical settlements are amounts paid by a viatical settlement company to a terminally ill person. Which of the following is true regarding a viatical settlement? A. The amount paid to the viator is tax-free B. The amount paid to the viator is taxable C. Taxable payments are made to a viator once the insured dies D. Non-taxable payments are made to a viator once the insured dies

The amount paid to the viator is tax-free

Which of the following riders prevents a policy from lapsing if the insured becomes disabled?

Waiver of premium

Bill has a $200,000 whole life policy with a $50,000 AD&D rider. Also attached is an accelerated benefits rider. A couple of years later Bill is terminally ill and receives $25,000 from the policy. Six months later he dies. What will the beneficiary receive? A. $175,000 B. $0 C. $150,000 D. The principal sum

$175,000 (200,000-25,000)

If an accidental death and dismemberment (AD&D) policy has a $100,000 capital sum for dismemberment, what benefit amount would be paid for accidental death?

$200,000

If an Accidental Death and Dismemberment policy has a $100,000 principal sum for accidental death, what benefit amount would be paid for a single accidental dismemberment?

$50,000

Sara purchases a whole life policy with a death benefit of $450,000. What type of rider can Sara add to her policy to cover her spouse in case he dies in an accident? A. Accidental death rider B. Payor rider C. Dismemberment rider D. Dependent rider

Dependent rider

Dividends are provided by mutual companies to their policyowners. Which of the following statements is NOT TRUE regarding dividends?

Dividends are taxable as ordinary income.

What non-forfeiture option provides the policyowner with the same amount of insurance protection, although in a different policy type or product?

Extended level term

Life insurers issuing participating policies may pay dividends to policyowners from surplus. All of the following are dividend options available to policyholders of such life insurance policies, EXCEPT: A. Reduced premium payments B. Extended term insurance C. Paid-up additions D. Accumulate at interest

Extended term insurance

Which of the following riders allows an insured to purchase an additional amount of life insurance protection, at specified times, without having to prove insurability?

Guaranteed insurability (GI)/guaranteed purchase option (GPO)

Which of the following is true regarding dividends paid by a permanent life insurance policy? A. Interest earned on dividends is taxable B. They are taxed as ordinary income C. Dividends plus interest are tax-deductible D. They are tax-deductible

Interest earned on dividends is taxable

Which of the following provides interest payments to the primary beneficiary following the death of the insured? A. Cash refund option B. Life interest option C. Interest only option D. Installment refund option

Interest only option

How would you describe the dividend option one year term?

It provides a term insurance death benefit that will provide additional coverage for 365 days.

Which answer below describes the dividend option One Year Term?

It provides a term insurance death benefit that will provide additional coverage for 365 days.

The payor benefit clause stipulates that: A. Premiums will be waived until the insured child reaches the age of majority B. Premiums will be decreased upon the activation of the automatic premium loan provision C. Premiums will be increased upon the death of the premium payor D. Premiums will be waived until the insured child reaches age 25

Premiums will be waived until the insured child reaches the age of majority

Nonforfeiture options are available to the owner of a cash value life insurance policy. Which of the following options provides the insured with life insurance for the greatest length of time? A. Surrender for cash B. Reduced paid-up insurance C. Paid-up additions D. Extended term insurance

Reduced paid-up insurance

Which of the following is not a dividend option? A. Reduced paid-up insurance B. Reduce the premium C. Accumulate at interest D. Cash

Reduced paid-up insurance

Cash value life insurance includes nonforfeiture benefits. Which of the following is such a benefit that appears in a permanent life insurance plan, whether issued to cover an individual or an eligible group ? A. Executive term B. Paid-up additions C. Reduce the premium D. Surrender for cash

Surrender for cash

A Viatical Settlement is a dollar amount paid by a Viatical Settlement company to a terminally ill person, in exchange for the ownership of their life insurance policy. Which of the following statements is not true?

The death benefit will be paid to the Viator at death.

A viatical settlement is a dollar amount paid by a Viatical Settlement company to a terminally ill person, in exchange for the ownership of their life insurance policy. Which of the following statements is NOT TRUE?

The death benefit will be paid to the viator at death.

A client purchases a whole life policy that includes an accidental death Rider. Eight years after the policy purchase, the client commits suicide. What if anything will be paid from this policy?

The full benefit from the whole life policy will be paid, but no benefit from the accidental death rider.

Oftentimes a rider is attached to a life insurance policy that either adds or eliminates a particular benefit or coverage type. Which statement below is a CORRECT statement?

The guaranteed insurability rider allows an insured to purchase additional amounts of protection without having to provide evidence of insurability.

What is the individual called who sells his insurance policy to a viatical settlement provider?

Viator

Which of the following parties transfers ownership of a life insurance policy to a viatical settlement firm ? A. Viatee B. Viatical settlement broker C. Viator D. Beneficiary

Viator

Cindy purchased a whole life policy with a $500,000 death benefit amount, and a 25% accelerated benefits rider provision. Cindy later becomes terminally ill and needs $60,000 to support her hospice care. Regrettably Cindy later succumbs to her illness and dies. How much death benefit will be payable to her beneficiary?

$440,000

Jana purchased a whole life policy with a $500,000 death benefit amount, and a 25% accelerated benefits rider provision. Jana later becomes terminally ill and needs $60,000 to support her hospice care. Regrettably Cindy later succumbs to her illness and dies. How much death benefit will be payable to her beneficiary?

$440,000

The life insurance settlement option which pays benefits (principal and interest) for a predetermined period of time best describes:

Fixed period

Which of the following settlement options is determined by the length of time proceeds are paid to a beneficiary? A. Fixed amount B. Fixed period C. Interest only D. Life income

Fixed period

How would you quickly describe the dividend option referred to as paid-up permanent additions?

It provides small amounts of additional paid-up whole life protection.

Which of the following policy options allows a policyowner to effectuate a single premium purchase? A. One year term B. Reduced premium payments C. Cash refund insurance D. Reduced paid-up insurance

Reduced paid-up insurance

Dividends paid by a life insurance policy are tax-exempt. Each of the following are true regarding dividend options, EXCEPT: A. The dividend may be used to purchase paid-up additions of permanent insurance B. The dividend may be used to pay part of the premium C. The dividend may accumulate at interest which is taxable D. The dividend is subject to taxation as ordinary income if taken in cash

The dividend is subject to taxation as ordinary income if taken in cash

Which of the following riders prevents a policy from lapsing if the insured becomes disabled for more than six months? A. Cost of living B. Payor benefit C. Waiver of premium D. Guaranteed insurability

Waiver of premium

Which rider may be added to a life insurance policy to make sure that a policy will not lapse if the insured is totally disabled? A. Accidental death B. Waiver of premium C. Automatic premium loan D. Guaranteed insurability

Waiver of premium

Dick owns a whole life policy with a face amount of $200,000. He has added an accidental death rider with the same face amount for an additional premium. A second rider has also been added which will prevent the policy from lapsing if Dick becomes disabled. This latter rider is known as the: A. Waiver of disability rider B. Disability income rider C. Payor benefit rider D. Waiver of premium rider

Waiver of premium rider

Richie the fireman purchased a whole life policy with a face amount of $1,500,000. His policy also contains an accidental death rider that will double the death benefit if he dies as the result of an accident. The policy also has an additional rider that will prevent the policy from lapsing if he becomes disabled. What is the name of the rider that will prevent his policy from lapsing?

Waiver of premium rider

What is the name of the rider that will prevent a policy from lapsing in the event the insured becomes disabled?

Waiver of Premium Rider

Which of the following is not automatically included in a life insurance contract? A. Insuring clause B. Entire contract provision C. Waiver of premium D. Beneficiary provision

Waiver of premium

A Family Policy's premium is based upon the age and health history of the primary insured. It automatically covers the insured's spouse and children. The same type of coverage may be provided by adding which of the following to an individual policy covering the primary insured? A. A dependent rider B. A straight life policy C. A payor rider D. A term insurance rider

A dependent rider

Which of the following best describes a return of unused premium? A. A dividend B. Policy surrender C. Pro rata return D. Interest

A dividend

Tim has a whole life policy with an assortment of riders attached. He is blinded in an accident and receives proceeds from one of the riders. Which of the following riders paid a benefit for his loss of sight? A. Impairment rider B. Return of premium rider C. Exclusion rider D. Accidental dismemberment rider

Accidental dismemberment rider

Whole life policies include several non-forfeiture values or options. What non-forfeiture option in this policy provides the greatest face amount of life insurance protection if selected? A. Fixed term option B. Reduced paid-up insurance C. Surrender for cash D. Extended level term insurance

Extended level term insurance

This rider allows an insured to purchase additional amounts of life insurance protection, at specified times, without having to prove insurability.

Guaranteed Insurability/Guaranteed Purchase Option

Which of the following will allow a chronically ill individual to generally receive a larger living benefit than an accelerated benefit rider ? A. Executive bonus B. Terminal illness rider C. Term life insurance policy D. Life or viatical settlement

Life or viatical settlement

Whole life policies include various options available to the owner. Which of the following policy options protects an insured against the lapse of a policy? A. Dividend options B. Settlement options C. Optional policy provisions D. Non-forfeiture options

Non-forfeiture options

The Non-forfeiture options provide the policyowner with three different options regarding what they can do with the cash value of their Whole Life policy upon policy surrender. All of the following are Non-forfeiture options EXCEPT:

One Year Term

Options are available to a policyowner who wishes to surrender their whole life policy. The non-forfeiture options provide the policyowner with three different options regarding what they can do with the cash value itself. All of the following are nonforfeiture options EXCEPT:

One year term

Which dividend option in a whole life contract allows the policyowner to purchase a different type of life insurance?

One year term insurance

Upon the death of an insured, a beneficiary is entitled to receive a death benefit. There are several options available to the beneficiary regarding how they wish to receive the proceeds. Which of the following is not a Settlement Option?

Paid-Up Permanent Additions

When a beneficiary is entitled to receive a death benefit, there are several options available in which to receive the proceeds. Which of the following choices is not a settlement option?

Paid-up permanent additions

All are dividend options except:

Reduced Paid Up

Which Non-forfeiture option will continue to provide a permanent form of protection with a smaller face amount or death benefit?

Reduced Paid Up

All of the following choices are dividend options except:

Reduced paid-up

In order for the waiver of premium benefit rider to be activated, which of the following must occur? A. The insured must die prematurely B. The insured must be partially disabled C. The insured must be under the care of a doctor D. The insured must file a claim form with the insurer

The insured must be under the care of a doctor