Chapter 4 Missed Questions Chapter Test

For a replacement policy of individual life insurance and annuities (other than variable contracts), the free look period is at least how many days? A. 7 B. 20 C. 15 D. 10

20 For a replacement policy for individual life insurance and annuities (other than variable contracts), the free look period is at least 20 days.

A policy is issued with a rider. Years later, the policyowner would like to drop the rider in order to save some money. Who has the authority to effect that policy change? A. The producer B. The beneficiary C. An executive officer of the insurer D. The insured

An executive officer of the insurer Any policy changes or modifications must be in writing and signed off at the home office by an executive officer. A producer cannot change, alter, modify, or waive any policy provisions.

What provision describes the parts of the life insurance contract? A. Incontestability B. Insuring C. Entire Contract D. Consideration

Entire Contract The entire contract clause describes the documents that are parts of the life insurance contract.

Which individual policy standard provision stipulates the conditions under which the insurer will not pay a claim while the policy was in force at the time of death of the insured? A. Exclusions B. Free Look C. Consideration Clause D. Misstatement of Age or Gender

Exclusions The Exclusions Provision specifies the conditions under which the insurer will not pay out a death claim if the insured dies while the policy is in force.

When a policy lapses due to nonpayment of premium, which nonforfeiture option is the automatic option? A. Extended Term B. Automatic Premium Loan C. Cash Surrender D. Reduced Paid-up

Extended Term The automatic nonforfeiture option is extended term. Automatic premium loan is a policy provision which must be elected by the policyowner in advance of the policy lapsing.

All of the following must be included in a Whole life policy, except: A. Surrender value B. Cash value accumulation C. Extended term provision D. Guaranteed dividend table

Guaranteed dividend table Dividends represent a refund of unused premiums when mutual insurers have a surplus. Dividends are not guaranteed.

Under what conditions can a producer alter, change, modify, or waive any policy provisions? A. Never B. With local agency management approval C. With home office approval D. If the policyowner consents

Never A producer cannot alter, change, modify or waive any policy provisions.

Which of the following is not a Dividend Option? A. Reduced Paid-Up B. Paid-Up Additions C. Accumulate at Interest D. Paid in Cash

Reduced Paid-Up Reduced Paid-Up is a nonforfeiture option.

The insured's spouse bought a Whole Life policy 15 years ago on the insured, and it has accumulated a cash value of several thousand dollars. Who has the right to change beneficiaries and access the cash value? A. The insured B. The spouse C. The beneficiary D. The insurer

The Spouse

M's policy was issued with an incorrect age. M was actually older than what was listed in the policy. Which of the following will the insurer most likely do if she had died 5 years after policy issue, but prior to this discovery? A. The insurer would simply reduce the death benefit by the amount of the premium underpayment B. The insurer would pay out a reduced benefit in proportion to the underpayment of premium C. The insurer would have to pay out the full face amount since the policy is now beyond the contestable period D. The insurer would bill the beneficiary for the underpayment in premiums

The insurer would pay out a reduced benefit in proportion to the underpayment of premium The Misstatement of Age or Sex provision allows the insurer to pay out the benefit that the correct premiums would have purchased. This means that the death benefit could be reduced if the age was understated.

What happens if a senior citizen in California fails to exercise the free look in time? A. The beneficiaries can file an error and omission claim against the agent for failure to disclose B. The unearned premium will be refunded to the insured C. An extension can be applied for through the insurer D. The late cancellation may result in a substantial penalty

The late cancellation may result in a substantial penalty If a senior citizen fails to exercise their free look in time, cancellation may result in a substantial penalty (surrender charge) if applicable.

What happens if a premium due is not paid before the end of the grace period? A. The coverage continues until the home office and the policyowner can work out a payment plan B. The policy lapses C. The policy converts to one that is more affordable for the client D. The policy automatically renews

The policy lapses Coverage continues during the grace period, but if the premium is not paid, the policy lapses at the end of the grace period.

Which of the following statements about policy dividends is true? A. Non-participating policies are eligible for dividends B. Dividends can only be withdrawn at certain specified intervals C. Dividends are guaranteed and taxable as income when received D. There are several dividend options to choose from

There are several dividend options to choose from Dividends are declared under participating policies. They are not guaranteed, and if received, the dividend itself is generally not taxable. They can be withdrawn any time there is an accumulation.

What is one of the main reasons for a Universal life policy to have a surrender charge? A. It is a way to recoup interest paid, but not earned by the policyholder B. It motivates the producer to properly sell the policy C. This provides a means for the insurer to recapture their upfront expenses involved in issuing the policy D. It encourages large additional premium deposits from policyowners

This provides a means for the insurer to recapture their upfront expenses involved in issuing the policy Surrender charges provide a means for the insurer to recapture their upfront expenses involved in issuing the policy.

Which of the following policies allow for a partial withdrawal or partial surrender? A. Current Assumption life B. Traditional Whole life C. Universal life D. Variable Whole life

Universal life A partial withdrawal of cash value is permitted in a Universal or a Variable Universal life policy.