Chapter exam 2 - Life Provisions

S buys a $50,000 whole life policy with a $50,000 Accidental Death and Dismemberment rider. S dies 1 year later of natural causes. How much will the insurer pay the beneficiary?

$50,000 (In this situation, the beneficiary is entitled to revive $50,000. )

The Consideration clause in a life insurance contract contains what pertinent information?

Amount of premium payments and when they are due (The consideration clause in a life insurance policy specifies the amount and frequency of premium payments that the policy owners must make to keep the insurance in force.)

The agreement in a life insurance contract that states a specific sum of money will be paid to a designated person upon an insured's death is called a(n):

Insuring agreement (The insuring clause or provision sets forth the company's basic promise to pay benefits upon the insured's death.)

All of the following statements are true regarding a policy's Grace period, EXCEPT:

Past due premiums are waived (Premiums due are NOT waived during a policy's Grace period.)

Which statement is TRUE in regards to policy loan?

Past-due interest on a policy loan is added to the total debt (Interest on a load which is not paid when due is added to the total debt.)

Variable Whole Life Insurance can be described as:

both an insurance and securities product (Variable Whole Life insurance is both an insurance and securities product)

Additional coverage can be added to a Whole Life policy adding a(n):

Decreasing term rider. (A decreasing term rider can add additional coverage to a whole life policy.)

P is blinded in an industrial accident. Which provision of his life insurance policy will pay a stated benefit amount?

Accidental Death and Dismemberment Clause (An AD&D clause provides benefits for death due to an accident or for the loss of one or more hands, feet, arms, legs, or loss of sight.)

What does the insuring agreement in a Life insurance contract establish?

An insurer's basic promise (The insuring agreement in a Life insurance contract establishes the basic promises of the insurance company)

Which rider provides coverage for a child under a parent's life insurance policy?

Child term rider (One of the best methods of adding coverage for a child on a parent's life insurance policy is to add a child term rider.)

How do life insurance companies handle cases where the insured commits suicide within the contract's stated Contestable period?

Claims are denied under the Suicide clause of the policy (Claims are denied under the suicide clause of the policy.)

Which provision prevents an insurer from changing the terms of the contract with the policy owner by referring to documents not found within the policy itself?

Entire contract provisions (Found at the beginning of the policy, states that the policy document, the application (which is attached to the policy), and any attached riders constitute the entire contract. Nothing may be "incorporated by reference," meaning that the policy cannot refer to any outside documents as being part of the contract.)

When an insurer issues a policy that refuses to cover certain risks, this is referred to as a(n):

Exclusion (are features of a life insurance policy stating that the policy will not cover certain risks.)

Which life insurance rider typically appears on a Juvenile life insurance policy?

Payor Benefit rider (A payor benefit rider provides for waiver of premium if the adult-payor of the policy dies or becomes totally disabled.)

Which of the following provisions guarantees that premiums will be waived if a Juvenile Life policy owner becomes disabled?

Payor clause (ensures that premiums will be waived for a Juvenile Life policy if the policy owner becomes disabled)

B owns a Whole Life policy with a guaranteed insurability option that allows him to purchase, without evidence of insurability, stated amounts of

additional Whole Life coverage at specified times (A guaranteed insurability option in a Whole Life Policy permits the policy owner to purchase, with evidence of insurability, stated amounts of whole life insurance at specified times.)

What action will an insurer take if an interest payment on a policy loan is no made on time?

automatically add the amount of interest due to the loan balance (Unpaid interest from a policy loan is added to the loan balance if not paid by the due date.)

What if the Suicide provision designed to do?

safeguard the insurer from an applicant who is contemplating suicide (The purpose of a suicide provision is to protect the insurer against the purchase of a policy in contemplation of suicide.)

S would life 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?

Beneficiary's age (The age of the beneficiary is irrelevant in deterring how much paid-up addition can be purchased.)

What does the ownership clause in a life insurance policy state?

Who the policy owner is and what rights the policy owner is entitled to. (The ownership clause in a life insurance policy is a provision that indicates who is the policy owner and provides a general description of the owner's rights. )