Individual Life Insurance Contract-Provisions and Options

b.reduction of premium

An insured pays $1200 annually for her life insurance premium. The insured applies this year $300 worth of accumulated dividends to the next year's premium thus reducing it to $900. What option does this describe? a.flexible premium b.reduction of premium c.accumulation at interest d.cash option

b.paid up additions

An insured has a life insurance policy from a participating company and receives quarterly dividends.He has instructed the company to apply the policy dividends to increase the death benefit. The dividend option that the insured has chosen is called a.reduction of premiums. b.paid up additions. c.one year term purchase. d.accumulation at interest.

a.grace period

The automatic premium loan is activated at the end of the a.grace period b.free look period c.elimination period d.policy period

a.incontestability clause

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 a.incontestability clause b.reinstatement clause c.insuring clause d.misstatement of age clause

a.joint and survivor

The type of settlement option which pays throughout the lifetimes of two or more beneficiaries are called a.joint and survivor b.fixed period c.fixed amount d.joint life

d.the beneficiary will only receive payments of the interest earned on the death benefit

Upon the death of the insured the primary beneficiary discovers that the insured chose the interest only settlement option. What does this mean? a.the beneficiary must pay interest of the insurer. b.the beneficiary will receive the lump sum plus interest. c.the primary beneficiary will receive the death benefit and the secondary beneficiaries will share the interest payments. d.the beneficiary will only receive payments of the interest earned on the death benefit.

a.it is reduced to the amount of what the cash value would buy as a single premium.

When a reduced paid up non forfeiture option is chosen what happens to the face amount of the policy? a.it is reduced to the amount of what the cash value would buy as a single premium. b.it is increased when extra premiums are paid. c.it decreases over the term of the policy. d.it remains the same as the original policy regardless of any differences in value.

c.the beneficiary must have insurable interest in the insured

Which is NOT true about beneficiary designations? a.the policy does not have a beneficiary named in order to be valid. b.trusts can be valid beneficiaries. c.the beneficiary must have insurable interest in the insured. d.the beneficiary may be a natural person.

a.beneficiaries are not identified by name.

Which of the following is TRUE about a class designation? a.beneficiaries are not identified by name. b.beneficiaries must be part of the insureds immediately family. c.it is not allowed. d.it determines the succession of beneficiaries.

d.the amount of premium payment.

Which of the following will be stated in the consideration clause of a life insurance policy? a.the parties to the contract. b.the time period allowed for the payment of premium. c.the conditions for insurability. d.the amount of premium payment.

a.naming beneficiaries as a group.

using a class designation for beneficiaries means a.naming beneficiaries as a group. b.not naming beneficiaries. c.naming an estate as the beneficiary. d.naming each beneficiary by his or her name.

a.cash value

what limits the amount that a policyowner may borrow from a whole life insurance policy? a.cash value b.premiums paid c.amount stated in the policy d.face amount