Chapter 3
S buys a $50,000 whole life policy with a $50,000 Accidental Death and Dismemberment rider. S dies 1 year layter of natural causes. How much will the insurer pay the beneficiary?50,000
50,000
The option that provides an additional death benefit for a limited amount of time at the lowest possible cost is called a
AD&D
A cost of living rider gives the insured
Additional death benefits
The automatic premium loan provision is designed to:
Avoid a policy lapse
Which statement regarding Misstatement of Age provision is considered to be true?
Coverage will be adjusted to reflect the insureds true age if a misstatement of age is discovered
Which of the following nonforfeiture options offers the highest death benefit?
Extended term
All of these settlement options involve the systematic liquidation of the death proceeds in the event of the insured's death, EXCEPT:
Interest Only
Which of the following statements about accumulated interest earned on dividends from an insurance policy is TRUE
It is taxed as ordinary income
An insured's inability to perform two or more activities of daily living may trigger which type of rider?
Long term care
M has an insurance policy that also has an outstanding policy loan at the time of M's death. The insurer will deduct the outstanding loan balance from the
Policy Proceeds
J let her life insurance policy lapse 8 months ago due to nonpayment. She can reestablish coverage under which of the following provisions?
Reinstatement provision
The advantage of reinstating an original life policy is
The premiums are based on a younger age
A Return of Premium life insurance policy is:
Whole life and insuring term
Additional coverage can be added to a Whole Life policy by adding a (n)
decreasing term
Dividends paid from a life insurance policy are issued by
insurer
When a misrepresentation on a life insurance policy application is discovered, what action may an insurance company take?
Void the policy only if it is discovered during the contestable period and proven to be material
The incontestable clause allows an insurer to
contest a claim during the contestable period
How are surrender chargers deducted in a life policy with a rear-end loaded provision?
Deducted from the death benefit
Which provision prevents an insurer from changing the terms of the contract with the policy owner by referring to documents not found within the policy itself?
Entire contract Provision
An insured is past due on his life insurance premium, but is still within the Grace Period. What will the beneficiary receive if the insured dies during this Grace Period
Full face amount minus any past due premiums
A long-term care rider in a life insurance policy pays a daily benefit in the event go which of the following?
Inability of the insured to perform more than 2 activities of daily living (ADL's)
The agreement in a life insurance contract that states a specific sum of money will be paid to a designated person upon a insured's death is called a(n)
Insuring agreement
The Accelerated Death Benefit provision in a life insurance policy is also known as a(n)
Living Benefit
Which of the following statements is CORRECT about accelerated death benefits
Must have terminal illness to qualify
In a life insurance policy, which provision states who may select policy options, designated and name a beneficiary, and be the recipient of any financial benefits from the policy
Owner's rights
A young, married teacher has 2 children and owns a Whole Life policy. If the teacher wants an increasing Death Benefit to protect against inflation, the teacher should select which of the following Dividend options?
Paid-Up Additional Insurance
A provision in a life insurance policy that pays the policy owner an amount that does not surpass the guaranteed cash value is called the
Policy loan provision
What benefit does the Payor clause on Juvenile Life policy provide?
Premiums are waived if payor becomes disabled
Which of these Nonforfeiture Options continue a build-up of cash value?
Reduced paid-Up
Which of these provisions require proof of insurability after a policy has lapsed?
Reinstatement
S buys a $10,000 Whole life policy in 2003 and pays an annal premium of $100. S dies 5 years later in 208 and the insurer pays the beneficiary $10,500, what kind of rider did S include the policy?
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 receive?
The full face amount