Chapter 4: Life Provisions

How long can an insurer legally defer paying the cash value of a surrendered life insurance policy?

6 months

Which life insurance policy would be eligible to include an automatic premium loan provision?

Whole life

Which statement regarding the waiver of premium rider is accurate?

Cash payment is not directly provided to the policy owner

A source of supplemental income for a life insurance policy owner can be derived from the

Cash value

In what way is a life insurance policy affected by an accelerated benefit payment?

Decreases the death benefit

Which life insurance policy option allows the policy owner to have coverage equal to the net death benefit of the lapsed policy?

Extended term nonforfeiture option

Which of the following is NOT subject to the promise to pay in an insuring clause?

How the premium is calculated.

Which of the following is NOT a dividend option for a life insurance policy?

Receiving the entire policy cash value

A life insurance policy owner would like a dividend option that results in a limited current outlay of funds. Which dividend option would be chosen?

Reduction of premium payment

A life insurance policy provision that has the ability to reduce the death benefit is called the

Accelerate benefit rider

Which benefit is normally payable to a life insurance policy owner when the insured's life expectancy has been severely limited?

Accelerated Benefit Rider

How is the insured protected if a payor benefit rider is attached to the life insurance policy?

Premiums payments are waived in the event the premium payor dies or becomes disabled

When a lapsed policy's premium has been paid current, it has the potential of being

Reinstated.

Which is not guaranteed in a whole life policy?

Dividend Scale

A life insurance policy that includes a return of premium rider will pay the beneficiary how much upon the insured's death?

Total premiums paid plus the policy face amount

In the event of premium default, which life insurance provision will use the cash value to keep the policy in force?

Automatic Premium Loan

Which of these statements is NOT true regarding a cash value loan against a life insurance policy?

Interest payments made by the policy owner are deductible