Chapter 4: Life Provisions
If an insured's age on a life insurance policy has been misstated, what is the insurer's liability if the insured dies?
A prorated death benefit based on the amount of insurance the insured's premiums would have been if purchased at the correct age
Which of these is considered to be a Living Benefit option in a life insurance policy?
Accelerated death benefit
Which of the following is considered to be an alternative to a life settlement?
Accelerated death benefit rider
All of these are common exclusions to a life insurance policy EXCEPT
Accidental death
Which dividend option would an insurer invest the policy-owner's money and add any interest earnings as the dividends accrue?
Accumulation at Interest Option
A provision that allows a policy-owner to temporarily give up ownership rights to secure a loan is called a(n)
Collateral assignment
Ownership of a life insurance policy may be temporarily transferred with a(n)
Collateral assignment
Life insurance policies will normally pay for losses arising from
Commercial aviation
In what part of an insurance policy are policy benefits found?
Declarations
Matt is applying for life insurance and requests a double indemnity rider. A double indemnity benefit will be payable to Matt's beneficiary if Matt
Dies instantly from a car accident
A life insurance policy-owner was injured in an automobile accident which results in a total and permanent disability. Which rider would pay a monthly amount because of this disability?
Disability income rider
Which of the following protects a policy-owner from a misrepresentation caused by an innocent mistake?
Incontestable clause
A guaranteed issue insurance policy has no
Medical underwriting
Joanne has a $100,000 whole life policy with an accumulated $25,000 of cash value. She would like to borrow $15,000 against the cash value. Which of the following statements is TRUE?
Net death benefit will be reduced if the loan is not repaid
What is an insurer required to do when faced with an error under the misstatement of Age provision?
Pay age-corrected benefits
What is an insurance policy's grace period?
Period of time after the premium is due but the policy remains in force
Which situation accurately describes a reduced paid-up nonforfeiture option?
Policy has a decreased face amount
In order to activate the reinstatement clause of lapsed life insurance policy, the insured MUST
Provide evidence of insurability to the insurer
The two major actions required for a policyholder to comply with the Reinstatement Clause are
Provide evidence of insurability, pay past due premiums
All of the following are considered to be nonforfeiture options available to a policy-owner EXCEPT
Reduction of Premium
Kurt is an active duty servicemen who was recently killed in an accident while home on leave. Which military service exclusion clause would pay upon his death?
Results
A life insurance policy-owner does NOT have the right to
Revoke an absolute assignment
Which of these is NOT a characteristic of the Accelerated Death Benefit option?
The benefit can be offered as a rider at a specific extra cost or may be at no cost.
James is the insured on a life insurance policy where age was misstated on the application. Which of the following is CORRECT regarding the death benefit amount?
The death benefit paid will be what the premium would have purchased at the correct age
Pat owns a 20-pay life policy with a paid-up dividend option. Which of the following statements is true?
The policy may be paid up early by using policy dividends
If an insured dies during the grace period with no premiums paid
The policy would be payable, minus the premium amount
Dorian exercised a nonforfeiture option by using his life policy's cash value to purchase an extended term insurance option. When the term insurance expires,
The protection ends
A life insurance policy normally contains a provision that restricts coverage in the event death under all of the following situations EXCEPT
fare-paying passenger
A whole life policy option where extended term insurance is selected is called a(n)
nonforfeiture option
A provision in a whole life policy that allows a policy-owner to terminate the policy in return for a reduced paid-up policy of the same type is called a(n)
nonforfeiture provision
The automatic premium loan provision authorizes an insurer to withdraw from a policy's cash value the amount of
past due premiums that have not been paid by the end of the grace period
