Chapter 4 Life Provisions

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

Under a life insurance policy, what does the insuring clause state?

he insurer's obligation to pay a death benefit upon an approved death claim While a life policy is in force, the insuring clause states the insurer's obligation is to pay the death benefit to the beneficiary when a death claim is approved.

The suicide clause of a life insurance policy states that if an insured commits suicide within a stated period from the policy's inception, the insurer will only be liable for a return of premiums paid

minus indebtedness and without interest

A provision in a whole life policy that allows a policyowner 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

An endorsement found in an insurance plan which modifies the provisions of the policy is called a .

rider

An insured individual and the policy's beneficiary die from the same accident. The common disaster provision states the insurer will continue as if

the insured outlived the beneficiary

A whole life insurance policy accumulates cash value that becomes

the policy loan value which the insured may borrow against

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

The free-look provision gives the policyowner

the right to return the policy for a full refund within a specified number of days

Loans obtained by a policyowner against the cash value of a life insurance policy

would not be treated as taxable income

Which of the following is considered to be an alternative to a life settlement?

Accelerated death benefit rider

What is the name of the provision which states that a copy of the application must be attached to the policy when issued?

Entire Contract

Which type of rider will waive the premium on a child's life insurance policy if the parent paying the premium dies?

Payor benefit

What is an insurance policy's grace period?

Period of time after the premium is due but the policy remains in force

In what part of an insurance policy are policy benefits found?

"Declarations". Essentially, the insurance declaration page is like a quick guide to the insurance policy, providing all of the basic information the policyholder needs to know

Which of these is considered to be a Living Benefit option in a life insurance policy?

Accelerated death benefit

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 dividend option would an insurer invest the policyowner's money and add any interest earnings as the dividends accrue?

Accumulation at Interest Option

Life insurance policies will normally pay for losses arising from

Commercial aviation

Barbara's policy includes a rider which allows her to purchase additional insurance at specific dates or events without evidence of insurability. This rider is called a(n)

Guaranteed insurability rider

Which of these is NOT considered to be a nonforfeiture option in a whole life insurance policy?

Interest only

Which of the following is a reinstatement condition?

Proof of insurabiilty

Kurt is an active duty serviceman who was recently killed in an accident while home on leave. Which military service exclusion clause would pay upon his death?

Results The "results clause" states the insurer is excused from paying the amount only if the death is a result of war.

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 Accelerated Death Benefit options are offered with NO increase in premium.

All of these are common exclusions to a life insurance policy EXCEPT

accidental death

Which of the following is NOT part of an insurance contract?

Certificate of Authority

A provision that allows a policyowner to temporarily give up ownership rights to secure a loan is called a(n)

collateral assignment