Exam FX: Life Policy Provision, Riders and Options
Other-insured rider
A rider attached to a life insurance policy that provides coverage on the insured's family members is called the
Paid-up additions,. Accumulated at interest, Reduction of premium.
All are dividend options
Fixed-period installments
All of the following are dividend options EXCEPT A. Paid-up additions. B. Fixed-period installments. C. Accumulated at interest D. Reduction of premium.
Term
Children's riders attached to whole life policies are usually issued as what type of insurance?
The same face amount as in the whole life policy
Under an extended term nonforfeiture option, the policy cash value is converted to
6 months
What is the waiting period on a Waiver of Premium rider in life insurance policies?
The beneficiary must have insurable interest in the insured.
Which is NOT true about beneficiary designations?
Life income
Which of the following settlement options in life insurance is known as straight life?
Suicide is excluded for a specific period of years and covered thereafter.
Which of the following statements about a suicide clause in a life insurance policy is true?
Reduction of premium
allows the policyholder to apply policy dividends toward the next years premium. the dividend is subtracted from the premium amount, yielding the new premium due for the next year.
Life income options
also known as straight life, provides the recipient with an income that he or she cannot outlive. It pays the benefit while the beneficiary is alive; however, the payments stop at the beneficiary's death.
Fixed-period installments
is a settlement option, and not one of the dividend options
Life income with period certain
which life insurance settlement option guarantees payments for the lifetime of the recipient, but also specifies a guaranteed period, during which, if the original recipient dies, the payments will continue to a designated beneficiary?
It is term coverage that is convertible to permanent insurance at or prior to the child reaching the maximum coverage age.
Which of the following is true of a children's rider added to an insured's permanent life insurance policy?
Collateral Assignment
A business owner was trying to obtain a bank loan to fund the purchase of a new business facility, but the bank required proof of additional assets to secure the loan. The business owner then decide to use her $250,000 life insurance policy to secure the loan. Which provision make this possible?
$50,000
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?
Grace period
What provision in an insurance policy extends coverage beyond the premium due date?
Increasing Term
What type of insurance would be used for a Return of Premium rider?
Increasing Term
is achieved by using increasing term insurance. When added to a whole life policy it provides that at death prior to a given age, not only is the original face amount payable, but also all premiums previously paid are payable to the beneficiary.
Reduction of premium
the policyowner pays for her life insurance annually. Until now, she has collected a nontaxable dividend check each year. She has decided that she would rather use the dividends to help pay for her next premium. What option would allow he to do this?
Both the principal and interest will be liquidated dover a selected period of time
which of the following best describes fixed-period settlement option?
Guaranteed insurability option
An individual is purchasing a permanent life insurance policy with a face value of $250,000. While this is all the insurance that he can afford at this time, he wants to be sure that additional coverage will be available in the future. Which of the following options should be included in the policy?