ch 4 life insurance policies,provisions,options,and riders quiz

an insured pays $1200 annually for her life insurance premium the insured applies this year $300 worth of accumulated dividends to the next year premium thus reducing it to $900 what option does this describe a.reduction of premium b.accumulation at interest c.cash option d.flexible premium

a.reduction of premium

which of the following statements about a suicide clause in a life policy is true ? a.suicide is excluded for a specific period of years and covered there after b.suicide is covered for a specific period of years and excluded thereafter c.suicide is covered as long as the policy is in force d.suicide is excluded as long as the policy is in force

a.suicide is excluded for a specific period of years and covered there after

all of the following are true regarding the guaranteed insurabliity rider except a.the insured may produce additional insurance up to the amount specified in the base policy b.it allows the insured to purchase additional amounts of insurance without proving insurability only at specified dates or events c.the rider is available to all insureds with no additional premium d.the insured may purchase additional coverage at the attained age

c.the rider is available to all insureds with no additional premium

the rider in a whole life policy that allows the company to forgo collecting the premium if the insured is disabled is called a.waiver of cost of insurance b.payor benefit c.waiver of premium d.guaranteed insurablity

c.waiver of premium

what is the name of a clause that is included in a policy that limits,or eliminates the death benefit if the insured dies as a result of war or while serving in the military a.limited b.aviation c.hazardous occupation d.military service or war

d.military service or war

in a case where the primary beneficary predeceases the insured in the event of the insured's death the death benefits proceeds will be paid to ? a.the insurance company b.the contingent beneficiary c.the insured's spouse d.the policyowner

b.the contingent beneficiary

what is the purpose of the free look period in insurance policies ? a.it allows the insurer to temporarily suspend coverage after an insured disability b.it allows the insurer to cancel coverage if a misrepresentation is discovered c.it allows the insured to reject the policy with a full refund d.it allows the insured 10 days to pay the initial premium

c.it allows the insured to reject the policy with a full refund

which option is being utilized when the insurer accumulates dividends at interest and then uses the accumulated dividends plus interest and the policy cash value to pay the policy up early a.paid-additions b.dividend accumulation plan c.paid-up options d.accumulation at interest

c.paid-up options

which entity determines the amount of accelerated death benefits that will be paid to an insurer a.federal law b.state law c.the insurer d.employers offering plans that include accelerated death benefits

c.the insurer

an insured stops making payments on a loan taken from his cash value policy what will most likely happen a.the insurer will not permit the policyowner to take out any more loans b.the policy will be reduced to an extended term option c.the policy will terminate when the loan amount with interest equals or exceeds the cash value d.the insurer will increase the interest rate on the loan and charge a penalty

c.the policy will terminate when the loan amount with interest equals or exceeds the cash value

when a reduced paid up nonforture option is chosen what happens to the face amount of the policy ? a.it is increased when extra premiums are paid b.it decreases over the term of the policy c.it remains the same as the original policy regardless of any differences in value d.it is reduced to the amount of what the cash value would buy as a single premium

d.it is reduced to the amount of what the cash value would buy as a single premium

under which nonforture option does the company pay the surrender value and have no further obligations to the policyowner a.paid-up options b.extended term c.cash surrender d.reduced paid-up

c.cash surrender

a father owns a life insurance policy on his 15 year old daughter the policy contains the optional payor benefit rider if the father becomes disabled what will happen to the life insurance premiums a.the premiums will become tax deductible until the insured 18 birthday b.since it is the policyowner and not the insured who has become disabled the life insurance policy will not be affected c.the insured will have to pay premiums for 6 months if at the end of this period the father is still disabled the insured will refund the premiums d.the insured's premium will be waived until she is 21

d.the insured's premium will be waived until she is 21

which of the following is true regarding the spendthirft clause in life insurance policies a.it is the same as irrevocable settlement clause b.it can protect the policy proceeds from creditors of the beneficiary c.it allows the beneficiary to select a different settlement option d.it is only used when the beneficary is a minor

b.it can protect the policy proceeds from creditors of the beneficiary

which of the following is true of a childrens rider added to an insured permanent life insurance policy a.each child covered must show evidence of insurability b.it is term coverage that is convertible to permanent insurance at or prior to the child reaching the maximum covered age c.it is permanent insurance d.the policy covers only the natural child of the insured

b.it is term coverage that is convertible to permanent insurance at or prior to the child reaching the maximum covered age