Exam FX Life Policy Riders, Provisions, Options, and Exclusions

If an insured recieves accelerated death benefits, what is the least amount of the original death benefit that the beneficiary would receive after the insured's death?

0%

What is the waiting period on a Waiver of Premium rider in life insurance policies?

6 months

The two types of assignments are

Absolute and collateral

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

Which of the following protects the insured from an unintentional policy large due to a nonpayment of premium?

Automatic premium loan

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 receives an annual life insurance dividend check. What term best describes this arrangement?

Cash option

Under which nonforfeiture option does the company pay the surrender value and have no further obligations to the policyowner?

Cash surrender

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

Items stipulated in the contract that the insurer will not provide coverage for are found in the

Exclusions clause

Which nonforfeiture option has the highest amount of insurance protection?

Extended Term

Which rider, when attached to a a permanent life insurance policy, provides and amount of insurance on every family member?

Family term rider

Which is TRUE about the cash surrender nonforfeiture option?

Funds exceeding the premium paid are taxable as ordinary income

An insured purchased a life insurance policy on his life naming his wife as primary beneficiary, and his daughter as contingent beneficiary. Under what circumstances could the daughter collect the death benefit?

If the primary beneficiary predeceases the insured

The life insurance policy clause that prevents an insurance company from denying payment of a death claim after a specified period of time is known as the

Incontestability clause

Which of the following policy components contain the company's promise to pay?

Insurance clause

Which provision of a life insurance policy states the insurer's duty to pay benefits upon the death of the insured, and to whom the benefits will be paid?

Insuring clause

An insured has a continuous premium whole life policy. She would like to use the policy dividends to pay off her policy sooner than would have been possible otherwise. What dividend option could she use?

Paid-up option

Which option is being utilized when the insurer accumulates dividends at interest and then uses the accumulated dividends, plus interest, and the policy cash value to pay the policy up early?

Paid-up option

An insured has had a life insurance policy that he purchased 3 years ago when he was 40 years old. He is killed in an automobile accident and it is discovered that he is actually 45 years old, and not 43, as stated on the application. What will the company do?

Pay a reduced death benefit

An insured purchases a policy in of 2008 and died in 2013. The insurance company discovers at that time that the insured concealed informati9n during the application process. What can they do?

Pay the death benefit

The paid-up addition option uses the dividend

To purchase a smaller amount of the same type of insurance as the original policy

When may an insurance company use suicide as a defense against paying a death claim?

When death occurs within a specified period of time after the policy was issued.

A life insurance policy does not have a war clause. If the insured is killed during a time of war, what will the beneficiary receive from the policy?

The full death benefit

The insured had his wife named as the beneficiary of his life insurance policy. To ensure that his wife had income for life after the insured's death, he chose the life incomes settlement option. The amount of payments will be determined by taking into account all of the following EXCEPT

The insured's age at death

The sole beneficiary of a life insurance policy dies before the insured. If the policyowner fails to change the beneficiary before the insured's death, the proceeds of the policy will go to

The insured's estate

A father owns a life insurance policy on his 15-year-old daughter. The policy contains the optional Payor Benefit rider. If the father becomes disabled, what will happen to the life insurance premiums?

The insured's premiums will be waived until she is 21

If a insured continually uses the automatic premium loan option to pay the policy premium

The policy will terminate when the cash value is reduced to nothing.

All of the following are true regarding the guaranteed insurability rider EXCEPT

The rider is available to all insureds with no additional premium

Under an extended term nonforfeiture option, the policy cash value is converted to

The same face amount as in the whole life policy

What is the other term for the cash payment settlement option?

Lump sum

What is the term for how frequently a policyowner is required to pay the policy premium?

Mode

Children's riders attached to whole life policies are usually issued as what type of insurance?

Term

Regarding the free-look provision, the insurance company

Must allow the policyowner to return the policy for a full refund

The dividend option in which the policyowner uses dividends to purchase a term policy for one year is referred to as the

One-year term option

A rider attached to a life insurance policy that provides coverage on the insured's family members is called the

Other-insured rider

Which of the following allows the insurer to relieve a minor insured from premium payments if the minor's parents have died or become disabled?

Payor Benefit

A couple owns a life insurance policy with a Children's Term rider. Their daughter is reaching the maximum age of dependent coverage, so she will have to convert to permanent insurance in the near future. Which of the following will she need to provide for proof of insurability?

Proof of insurability is not required

Which of the following factors determines the amount of each installments paid in a Life Income Option arrangement?

Recipient's life expectancy and amount of principal

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 her to do this?

Reduction of premium

Nonforfeiture values guarantee which of the following for the policyowner?

That the cash value will not be lost

Which of the following information will be stated in the consideration clause of a life insurance policy?

The amount of premium payments

Which is NOT true about beneficiary designations?

The beneficiary must have insurable interest in the insured.

Z falls from the roof of his house while fixing it and damages his spinal column enough to render him disabled for a year. His insurance policy carries a Disability Income Benefit rider. Which of the following benefits will Z receive?

Monthly premium waiver and monthly income

An insured has chosen joint and 2/3 survivor as the settlement option. What does this mean to the beneficiaries?

The surviving beneficiary will continue receiving 2/3 of the benefit paid when both beneficiaries were alive.

Which of the following statements is TRUE concerning irrevocable beneficiaries?

They can be changed only with the written consent of that beneficiary.

What is the purpose of a fixed-period settlement option?

To provide a guaranteed income for a certain amount of time

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 decided to use her $250,000 life insurance policy to secure the loan. Which provision makes this possible?

Collateral assignment

All of the following are Nonforfeiture options EXCEPT

Interest only

The policyowner wants to make sure that upon his death, the life policy will pay a portion of the proceeds annually to his spouse, but that the principal will be paid to their children when they reach a certain age. Which settlement option should the policyowner choose?

Interest only option

What is the benefit of choosing extended term as a nonforfeiture option?

It has the highest amount of insurance protection.

Which of the following statements is TRUE about a policy assignment?

It transfers rights of ownership from the owner to another person.

The type of settlement option which pays throughout the lifetimes of two or more beneficiaries is called

Joint and survivor

Which two terms are associated directly with the premium?

Level or flexible

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?

Life income with period certain