Individual Life Insurance Contract - Provisions and Options QUIZ

An insured receives an annual life insurance check. What best describes this arrangement?

Cash option

Who has the legal title of the property in a trust?

Trustee

Describe Absolute Assingment?

involves transferring all right of ownership to another person or entity.

What does a Surrender Charge do?

it is a fee charged to the insured when a policy or annuity is surrendered for its cash value.

What is the purpose of an incontestability clause?

it prevents an insurer from denying a claim due to statements in the application after the policy has been in force for 2 years.

What best describes Collateral Assignment

Involves a transfer of partial rights to another person, and is usually done in order to secure a loan or some other transaction, and one debts are repaid, assigned rights are returned to the policy holder.

What is a true statement about a life settlement option?

It provides a single beneficiary income for the rest of his/her life. Upon the death of the beneficiary, the payments stop.

What is a true statement about policy assignment?

It transfers rights of part or all ownership of a policy from the owner to another person.

What nonforfeiture option provides coverage for the longest period of time?

Reduced paid-up, which provides protection until the insured reaches 100, while the face amount is reduced to what the cash would buy.

An insured committed suicide within 2 years after his life insurance policy was issued. The insurer will?

Refund the premiums paid.

In a case where the primary beneficiary predeceases the insured, on the event of the insured's death, the death benefit proceeds will be paid to?

The contingent beneficiary.

A 40 year old man buys a whole life policy and names his wife as his only beneficiary. His wife dies 10 years later. He never remarries and dies a age 61, leaving 2 grown up children. Assuming he never changed the beneficiary, the policy proceeds will go to.

The insure's estate, because there is no viable beneficiary at the time of death.

An insured stops making payments on a loan taken from his cash value policy. What will most likely happen?

The policy will terminate when the loan amount with interest equals or exceeds the cash value.

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

To provide a guaranteed income for a certain amount of time.

A policy owner fails to pay the premium due on his whole life policy after the grace period passes, but the policy remains in force. This is due to what provision?

Automatic premium loan.

What protects an insured from unintentional policy lapse due to a nonpayment of premium?

Automatic premium loan.