Chapter Three: Life Provisions

T took out a $50,000 life insurance policy with an Accidental Death and Dismemberment rider. Five years later, T commits suicide. How much will the insurer pay?

$50,000 The suicide occurred outside the Suicide clause period (normally 1-2 years), thus the face amount will be paid.

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

Amount of premium payments and when they are due

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

Child term rider

N is covered by a Term Life policy and does not make the required premium payment which was due August 1. N dies September 15. What action will the insurer take?

Claim will be denied

Which of these types of policies may NOT have the Automatic Premium Loan provision attached to it?

Decreasing Term

How are surrender charges deducted in a life policy with a rear-end loaded provision?

Deducted when the policy is discontinued

D is the policyowner and insured for a $50,000 life insurance policy. The beneficiary is D's wife. D and his wife divorce and D remarries, transferring ownership of his policy to his new wife. If D dies without making any further changes, to whom will the policy proceeds be paid to?

Ex-wife D's ex wife is still the beneficiary of this policy, even though policy ownership has changed to his current spouse.

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?

Exclusion

In a Life insurance contract, an insurance company's promise to pay stated benefits is called the

Insuring clause

Which of these are NOT an example of a Nonforfeiture option?

Life Income

The Accelerated Death Benefit provision in a life insurance policy is also known as a(n)

Living Benefit

An insured's inability to perform two or more activities of daily living may trigger which type of policy rider?

Long Term Care

In a life insurance policy, which provision states who may select policy options, designate and name a beneficiary, and be the recipient of any financial benefits from the policy?

Owner's Rights

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

Past due premiums are waived

M had an annual life insurance premium payment due January 1. She died January 10 without making the premium payment. What action will the insurer take?

Pay face amount minus the past due premium

Which of these Nonforfeiture Options continue a build-up of cash value?

Reduced Paid-Up

Which of these life insurance riders allows the applicant to have excess coverage?

Term rider

Which type of life policy contains a monthly mortality charge as well as self-directed investment choices?

Variable Universal Life

The automatic premium loan provision is designed to

avoid a policy lapse

Variable Whole Life Insurance can be described as

both an insurance and securities product