Chapter 4.2 Exam Questions

P is blinded in an industrial accident. Which provision of his life insurance policy will pay a stated benefit amount? a. Accelerated Benefits Provision b. Entire Contract c. Accidental Death and Dismemberment clause d. consideration clause

C. Accidental Death and Dismemberment Clause

What does the ownership clause in a life insurance policy state? a. Who the policyowner is and what rights the policyowner is entitled to b. Who the beneficiary is and what rights the beneficiary is entitled to c. Ownership cannot be assigned after the incontestable periof d. Allows the policyowner to adjust the death benefit and premium amount at anytime

a

The automatic premium loan provision is designed to: a. provide a source of revenue to the insurance company b. avoid a policy lapse c. allow a policyowner to request a policy loan d. allow a policyowner to take out additional coverage without evidence of insurability

b

When an insurer issues a policy that refuses to cover certain risks, this is referred to as a(n) a. elimination b. exclusion c. limitation d. exception

b

Which of these types of life insurance allows the policyowner to have level premiums and to also choose from a selection of investment options? a. Modified whole life b. variable life c. universal life d. adjustable life

b

N is a student pilot with a large life insurance policy. Which of these features would limit the insurer's obligation in the event N was killed while flying as a student pilot? a. Misrepresentation b. exclusion c. collateral assignment d. concealment

b. exclusion

S buys a $10,000 Whole Life policy in 2003 and pays an annual premium of $100. S dies 5 years later in 2008 and the insurer pays the beneficiary $10,500. What kind of rider did S include on the policy? a. accelerated death benefit rider b.Return of premium rider c. Family Income Rider d. Term Rider

b. return of premium rider

Additional coverage can be added to a Whole Life policy by adding a(n) a. payor rider b. accelerated benefit rider c. decreasing term rider d. automatic premium loan rider

c

What action can a policyowner take if an application for a bank loan requires collateral? a. utilize accelerated benefits provision b. borrow against policy cash value and use as a down payment c. assign policy ownership to the bank d. name back as beneficiary

c

Which of these types of policies may NOT have the Automatic Premium Loan provision attached to it? a. Modified Whole life b. 20-Pay life c. Decreasing term d. Endowment

c

M has an insurance policy that also has an outstanding policy loan at the time of M's death. The insurer will deduct the outstanding loan balance from the a. cash value b. estate of the insured c. policy proceeds d. non forfeiture value

c. policy proceeds

D was actively serving in the Marines when he was killed in an automobile accident while on leave. His $100,000 Whole life policy contains a War Exclusion clause. How much will D's beneficiary's receive? a. Refund of premiums paid plus interest b. nothing, due to actively serving in the armed forces c. Double the face amount because cause of death was accidental d. the full face amount

d

The incontestable clause allows an insurer to: a. disallow a change of ownership throughout the Contestable period b. disallow a change of benefits c. contest a claim at anytime if the cause of death was accidental d. contest a claim during the contestable period

d

When a misrepresentation on a life insurance policy application is discovered, what action may an insurance company take? a. Void the policy if found during the contestable period b. void the policy, no matter when it is discovered c. Void the policy at any time only if it is found to be material d. Void the policy only if it is discovered during the Contestable period and proven to be material

d

S would like to use dividends from her life insurance policy to purchase paid-up additions. All of these would be factors that determine how much coverage can be purchased EXCEPT a. type of life insurance b. s's attained age c. dividend amount used toward purchase d. beneficiary's age

d. beneficiary's age

Accidental Death and Dismemberment provision in a life insurance policy would pay additional benefits if the insured: a. dies of natural causes b. becomes critically ill c. becomes chronically ill d. is blinded in an accident

d. is blinded in an accident

Which of the following statements about accumulated interest eared on dividends from an insurance policy is true? a. it is not taxable b. it is tax deductible c. it is taxed as capital gains d. It is taxed as ordinary income

d. it is taxed as ordinary income