Chapter 5 individual life insurance contract, provisions, and options quiz
An insured owns a $50,000 whole life policy. At age 47, the insured decides to cancel his policy and exercise the extended term option for the policy's cash value, which is currently $20,000. What would be the face amount of the new term policy?
$50,000
According to the Entire Contract provision, a policy must contain
A copy of the original application for insurance
Which of the following is TRUE about a class designation?
Beneficiaries are not identified by name
Which of the following best describes fixed-period settlement option?
Both the principal and interest will be liquidated over a selected period of time.
An insured pays an annual premium to his insurer. In return, the insurer promises to pay benefits in accordance with the terms of the contract. This is called
Consideration. "Consideration" is the value offered by the insured to the insurer, and vice versa. The insured makes accurate statements in the application and remits premium payments. In exchange, the insurer provides benefits as stipulated in the contract.
Using a class designation for beneficiaries means
Naming beneficiaries as a group
An insured purchased a life policy in 2010 and died in 2020. The insurance company discovers at that time that the insured had misstated information about her insurance history on the application. What will the insurer do?
Pay the death benefit
An insured misstates her age at the time the life insurance application is taken. This misstatement may result in
adjustment in the amount of death benefit
The automatic premium loan provision is activated at the end of the
grace period
Which of the following is true regarding a single life settlement option?
it provides income the beneficiary cannot outlive
An insured stops making payments on a loan taken from his cash value policy. What will most likely happen?
The policy will terminate when the loan amount with interest equals or exceeds the cash value.