Chapter 3 (part 2)

An insured and his wife are both involved in a head-on collision. The husband dies instantly, and the wife dies 15 days later. The company pays the death benefit to the estate of the insured. This indicates that the life insurance policy had what provision?

Common Disaster

An insured pays an annual premium to his insurer. The insurer promises to pay benefits in accordance with the terms of the contract. This is called

Consideration

An insured owns a $50,000 whole life policy. At age 47, the insured decides to cancel his policy and exercise the extended term option for the policy's cash value, which is currently $20,000. What would be the face amount of the new term policy?

$50,000

For how long is an insurance company allowed to defer policy loan requests?

6 months

What type of insurance would be used for a Return of Premium rider?

Increasing Term

Which of the following is true of a children's rider added to an insider's permanent life insurance policy?

It is term coverage that is convertible to permanent insurance at or prior to the child reaching the maximum coverage

Which life insurance settlement option guarantees payments for the lifetime of the recipient, but also specifies a guaranteed period, during which, if the original recipient dies, the payments will continue to a designated beneficiary?

Life income with period certain

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

Lump-sum payment

If the policyowner, the insured, and the beneficiary under a life insurance policy are three different people, who has the ownership rights?

Policyowner

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

The cash balje is converter to the same face amount as in the whole life policy

The insured had his wife named as the beneficiary of his life insurance policy. To ensure that his wife had income for life after the insureds death, he chose the life income settlement option. The amount of payments will be determined by taking into account all of the following except

The insured's age at death

What happens to the proceeds of a life insurance policy if there is no named beneficiary?

The proceeds are paid to the insured's estate

The paid-up addition option used the dividend

To purchase a smaller amount of the same type of insurance as the original policy.

When the policyowner specifies a dollar amount in which installments are to be paid, he/she has chosen which settlement option?

a fixed amount

What is the other term for the cash payment settlement option?

lump sum

Which of the following riders would not cause the death benefit to increase?

payor benefit rider