L/A/H Insurance . C6.Life Insurance Policy Options & Benefit Riders . Questions

Which rider below could be called an "inflation offset"? A. Cost of living rider B. Return of Premium Rider C. Return of Cash Value Rider D. None of the above

A

Jack is covered by a $100,000 whole life policy. The policy includes a term life insurance rider providing an extra $50,000 of coverage until Jack retires at age 65. If he dies sixteen years following his retirement, what will the insurer pay the primary beneficiary? A. $0 B. $50,000 C. $100,000 D. $150,000

C

Jana purchase a whole life policy with a $500,000 death benefit amount, and a 25% accelerated benefits rider provision. Jana later becomes terminally ill and needs $60,000 to support her hospice care. Regrettably, Jana later succumbs to her illness and dies. How much death benefit will be payable to her beneficiary. A. $500,000 B. $560,000 C. $440,000 D. $400,000

C

John selects a settlement option paying a life income of $2,000 per month with 10 years certain. If he dies five years later, his beneficiary would receive a csh refund of: A. $24,000 B. $96,000 C. $120,000 D. $240,000

C

The life insurance Settlement Option which pays benefits (principal and interest) for a predetermined period of time best describes: A. Fixed Amount B. Interest Only C. Fixed Period D. Life Annuity

C

The life insurance settlement option which pays benefits (principal and interest) for a predetermined period of time best describes: A. Fixed amount B. Interest Only C. Fixed Period D. Life Annuity

C

The wavier of premium rider, when added to a life insurance policy, would provide coverage in which of the following circumstances? A. The insured breaks his leg which permits him to work part time B. the insured is unemployed for 6 consecutive months C. the insured suffers total disability lasting eight months D. the insured suffers a partial disability lasting 12 months

C

When a beneficiary is entitled to receive a death benefit, there are several options available in which to receive the proceeds. Which of the following choices is not a Settlement Option? A. Life Income B. Interest Only C. Paid-up Permanent Additions D. Fixed Period

C

"Income for the life of the policyowner" could be used to describe which of the following Settlement Options? A. Fixed Amount B. Interest Only C. Fixed Period D. Life Income

D

A Viatical Settlement is a dollar amount paid by a Viatical Settlement company to a terminally ill person, in exchange for the ownership of their life insurance policy. Which of the following statements is NOT TRUE? A. A Viatical Settlement involves a transfer of ownership. B. The amount paid to the viator is free from federal taxation. C. Absolute assignment has occurred in a viatical settlement. D. The death benefit will be paid to the viator at death.

D

A life insurance producer sells a straight life policy to a 55 year old male in excellent health. The producer also convinces the applicant to add an accelerated benefits rider and a waiver of premium rider to the policy as well. What additional type of rider can be added to this policy to cover the applicant's spouse if she dies in an accident? A. accidental death rider B. payor rider C. guaranteed insurability rider D. dependent rider

D

A rider attached to a life insurance policy is part of the: A. Face page of the policy B. Incontestable provision C. Owner's rights D. Entire Contract

D

A rider that permits the policyowner to purchase additional amounts of insurance without taking a physical examination best describes: A. Wavier of premium Rider B. Payor Benefit Rider C. Cost of living rider D. Guaranteed insurability rider

D

Participating (par) or Mutual companies may pay dividends to their policyowners. Which of the following is a Dividend Option? A. Cash B. Reduce Future Premium C. Accumulate at Interest D. All the above

D

Whole life policies include non-forfeiture options that are available in the event the policyowner wishes to surrender the policy. Once a policy is surrendered it cannot be: A. Renewed B. Voided C. Reissued D. Reinstated

D

A client purchases a whole life policy that includes an Accidental Death rider. Eight years after the policy purchase, the client commits suicide. What if anything will be paid from this policy? A .Nothing, since suicide is not covered. B. The beneficiary will only receive a return of premium. C. The full benefits from both policies will be paid since suicide is covered after 2 years. D. The full benefit from the Whole life policy will be paid, but no benefit from the Accidental Death rider.

D The Whole life policy will pay because suicide is covered after 2 years. The accidental death benefit will not be paid because suicide is not considered an accident.

How would you quickly describe the dividend option referred to as Paid-up Permanent Additions? A. It provides small amounts of additional paid-up Whole life protection. B. It is used to endow the cash value prior to age 100. C. It eliminates the need for additional insurance protection. D. It pays a Term death benefit if death occurs within the next year.

A

In order to be eligible for long-term care benefits under a life insurance policy, the insured must be unable to perform how many activities of daily living? A. 2 B. 3 C. 4 D. 5

A

This rider allows an insured to purchase additional amounts of life insurance protection, at specified times, without having to prove insurability A. Guaranteed Insurability/Guaranteed Purchase Option B. Waiver of Premium C. Cost of Living D. Payor Benefit

A

Which non-fortfeiture option indicates that insurance coverage no longer exists? A. Cash surrender B. Extended Term Insurance C. Reduced Paid Up Insurance D. Paid-Up Additions

A

Which of the following riders adjusts the death on a life insurance contract, as an inflation offset? A. Cost of Living rider B. Return of Premium rider C. Return of Cash Value rider D. None of the above

A

A rider that pays an increasing amount of term insurance equal to the total amount of total payments made for coverage, in addition to the death benefit at the time of death, is known as: A. return of cash value B. return of premium C. increasing benefits rider D. accelerate benefits rider

B

Alex owns a $50,000 life insurance policy. It also includes a waiver of premium and disability income rider. If alex is disabled for 6 straight months he will begin to receive what amount of income per month while he is disabled? (1%) A. $250 B. $500 C. $1,000 D. $5,000

B

All of the following are settlement options available in a life insurance contract, EXCEPT: A. Fixed Period B. Paid-Up Additions C. Interest Only D. Life Income

B

All of the following are types of dividend options, EXCEPT: A. Paid-Up Additions B. Reduced paid-up insurance C. One-year term insurance D. Accumulate at interest

B

An accelerated benefits rider may be added for an additional premium to a life insurance policy. Living benefits may be paid for each of the following, EXCEPT: A. Long-term care B. Disability Income C. Terminal illness D. Dread disease

B

Beverly rogers owns a permanent life insurance policy with a death benefit of $200,000. She has also added to it an accelerated benefits rider with a 25% clause. The policy also includes an accidental death rider for $500,000. If Beverly is diagnosed with terminal cancer and receives the maximum amount from the appropriate rider, what will be paid to her beneficiary following her death? A. $50,000 B. $150,000 C. $175,000 D. $200,000

B

Each of the following is a dividend option available in a participating policy, EXCEPT: A. Reduce the premiums B. Reduce paid-up insurance C. Accumulate at interest D. Paid-Up additions

B

If a policyowner exercises a paid-up additions dividend option, the amount of coverage purchased will be based upon the insured's attained age and: A. the amount of cash value B. the amount of the dividend C. the face amount of the policy D. the reduced paid-up amount

B

If an accidental death and dismemberment policy has a $100,000 principal sum for accident death, what benefit would be paid for a single accidental dismemberment? (50%) A. $100,000 B. $50,000 C. $300,000 D. $400,000

B

Richie, who is a fireman, purchased a Whole life policy with a face amount of $1,500,000. His policy also contains an Accidental Death rider that will double the death benefit if he dies as the result of an accident. The policy also has an additional rider that will prevent the policy from lapsing if he becomes disabled. What is the name of the rider that will prevent his policy from lapsing? A. Accidental Lapse Protection B. Waiver of Premium rider C. Waiver of Premium policy D. Premium Lapse Protection rider

B

What Non-forfeiture option provides the policyowner with the same amount of insurance protection, although in a different policy type or product? A. Cash Surrender B. Extended Level Term C. Reduced Paid-up D. One Year Term

B

What is the name of the rider that will prevent a policy from lapsing in the event the insured become disabled? A. Accidental Lapse Protection B. Wavier of Premium Rider C. Waiver of Premium Policy D. Premium Lapse Protection

B

Which of the following riders prevents a policy from lapsing if the insured becomes disabled? A. Accelerated benefits rider B. Waiver of premium rider C. Accidental Death Rider D. Cost of Living Rider

B

If an Accidental Death and Dismemberment (AD&D) policy has a $100,000 capital sum for dismemberment, what benefit amount would be paid for accidental death? A. $100,000 B. $200,000 C. $300,000 D. $400,000

B The capital sum for accidental dismemberment is always 50% or half the benefit that is paid for accidental death. The accidental death benefit is called the principal sum.

For the Accidental Death benefit to be payable, the death must be solely caused by an accident, and the death must have occurred within ____ days of the accident. A. 45 B. 60 C. 90 D. 180

C

Upon the death of an insured, a beneficiary is entitled to receive a death benefit. There are several options available to the beneficiary regarding how they wish to receive the proceeds. Which of the following is not a settlement option? A. Life income B. Interest Only C. Paid-Up Permanent additions D. Fixed Period

C

What type of assignment process is used when an individual sells their life insurance contract to a Viatical Settlement Company? A. Collateral B. Specific C. Absolute D. Persuasive

C

When a policyowner sells their insurance policy to a viatical settlement company, what type of assignment has occurred? A. Collateral B. Specific C. Absolute D. Persuasive

C

Which non-forfeiture option is automatically exercised if a policy lapses with current cash value and the insurer is unable to contact the policyowner? A. Reduced paid-up insurance B. Surrender for cash C. Extended Term Insurance D. Return of Premium

C

Which non-forfeiture option will continue to provide a permanent form of protection with a smaller face amount or death benefit? A. Cash surrender B. Extended Level Term C. Reduced Paid-Up D. There are only 3 non-forfeiture options. This choice will not be the answer.

C

Which of the following Non-forfeiture options will continue to provide a permanent form of protection with a smaller face amount or death benefit? A. Cash Surrender B. Extended Level Term C. Reduced Paid-up D. There are only three Non-forfeiture options. Choice "D" will not be the answer.

C

Which of the following policy options allows a policyowner to effectuate a single premium purchase? A. Paid-up additions B. Surrender for cash C. Extended Term Insurance D. Reduced Paid Up Insurance

C

Which of the following settlement options potentially provides a beneficiary with the greatest benefit per $1,000 of proceeds? A. Fixed Period B. Interest only C. Life Income D. Fixed Amount

C

A viatical settlement is a dollar amount paid by a viatical settlement company to a terminally ill person, in exchange for the ownership of their life insurance policy. Which of the following statements is NOT TRUE? A. A viatical settlement involves a transfer of ownership B. The amount paid to the viator is free from federal taxation C. Absolute assignment has occurred in a viatical settlement D. the death benefit will be paid to the viator at death

D

Mutual companies may pay dividends to their policy owners. Which of the following is a dividend option? A. Cash B. Reduce Future Premium C. Accumulate At Interest D. All the above

D

Oftentimes a rider is attached to a life insurance policy that either adds or eliminates a particular benefit or coverage type. Which statement below is a CORRECT statement? A. The Cost of Living rider increases the disability benefit payable on a life insurance policy. B. Accidental Death riders are very expensive. C. An Accelerated Benefit rider allows the insured to take an advance against the death benefit of up to 90% of the contract's death benefit. D. The Guaranteed Insurability rider allows an insured to purchase additional amounts of protection without having to provide evidence of insurability.

D

Bill Miles buys an individual whole life policy with a face amount of $160,000. He adds to the policy a family rider to cover his 43-year-old wife, his daughter, and an adopted son. All of the following will be covered by the rider, EXCEPT: A. The insured B. The Spouse C. The daughter D. The adopted son

A

Dividends paid on life insurance policy may be referred to as a return of an overpayment of premium. Which of the following best describes the tax treatment of life insurance dividends? A. Not taxable as ordinary income B. Taxable as ordinary income C. Tax-Deductible D. Non tax-deductible

A

Which of the following riders allows an insured to purchase an additional amount of life insurance protection, at specified times, without having to prove insurability? A. Guaranteed Insurability (GI)/Guaranteed Purchase Option (GPO) rider B. Waiver of Premium rider C. Cost of Living rider D. Payor Benefit rider

A

If a whole life policy premium is not paid by the end of the contract's grace period and the policy contains several thousand dollars of equity, what policy option will protect the insured against a coverage lapse? A. the grace period B. the automatic premium loan provision C. the non-forfeiture option D. the settlement options

C

What type of rider can be added to a policy covering a child which will allow him or her to purchase additional amounts of life insurance in the future without requiring a medical examination? A. a payor rider B. a guaranteed insurability rider C. a dependent rider D. a family rider

B

Which dividend option in a whole life contract allows the policyowner to purchase a different type of life insurance? A. Paid-up Additions B. One Year Term Insurance C. Accumulate at Interest D. Reduce the Premium

B

Which of the following policy options allows a policyowner to effectuate a single premium purchase? A. Cash refund insurance B. Reduced paid-up insurance C. One year term D. Reduced premium payments

B

Which of the following riders prevents a policy from lapsing if the insured becomes disabled? A. Guaranteed Insurability rider B. Waiver of Premium rider C. Cost of Living rider D. Payor Benefit rider

B

All of the following are considered to be an activity of daily living, EXCEPT: A. Dressing B. Bathing C. Working D. Feeding

C

An individual purchases a whole life policy with an accelerated benefits rider of 40%. The contract, which provides a death benefit of $250,000, also includes a $100,000 accidental death rider and a waiver of premium rider. A dependent rider is added to cover the remaining family members. 27 years after the policy is purchased, a loan of $13,000 against the policy's cash value is effected. If the insured dies from a terminal illness within a month after receiving the equity, what will be paid to the beneficiary? A. $137,000 B. $150,000 C. $237,000 D. $250,000

C

Bill has a $200,000 whole life policy with a $50,000 AD&D rider. Also attached is an accelerated benefits rider. A couple of years later Bill becomes terminally ill and receives $25,000 from the policy. 6 months later he dies. What will the beneficiary receive? A. The principal sum B. $150,000 C. $175,000 D. $225,000

C

Cindy purchased a whole life policy with a $500,000 death benefit amount, and a 25% Accelerated Benefits rider provision. Cindy later becomes terminally ill and needs $60,000 to support her hospice care. Regrettably Cindy later succumbs to her illness and dies. How much death benefit will be payable to her beneficiary? A. $500,000 B. $560,000 C. $440,000 D. $400,000

C

Each of the following riders affect the face amount of a life insurance police, EXCEPT: A. Cost of living Rider B. Return of premium C. Waiver of premium D. Accidental death.

C

For accidental death benefit to be payable, the death must be solely caused by an accident, and the death must have occurred within ______ days of the accident. A. 45 B. 60 C. 90 D. 180

C

Alex owns a graded premium life policy with a face amount of $500,000. A family term rider is added to the contract in addition to an accelerated benefits rider of 30%. Alex is suffering from a terminal disease and notifies the insurer. The insurer activates the latter rider and sends the maximum amount allowable to Alex. If he dies 3 months later, what will be paid to his beneficiary? A. $500,000 B. $470,000 C. The death benefit plus the accelerated amount of 30% D. The remainder of the death benefit

D

Alice owns a $100,000 life insurance policy with an accelerated benefits rider which includes a 40% clause. Five years after purchasing the policy, Alice is diagnosed with a serious illness. She notifies the insurer and fourteen months later dies. How much will the policy pay her beneficiary at the time of death? A. $0 B. $40,000 C. $60,000 D. $100,000

D

All are Dividend Options except: A. Cash B. Reduce Future Premiums C. Paid-Up Permanent Additions D. Reduce Paid Up

D

All of the following choices are dividend options except: A. Cash B. Reduce Future Premium C. Paid-up Permanent Additions D. Reduced Paid-up

D

Dividends are provided by Mutual companies to their policyowners. Which of the following statements is NOT TRUE regarding dividends? A. Dividends can be used to purchase additional one year term protection. B. If a dividend generates any interest earnings, the interest is taxable as ordinary income. C. Dividends can be used to offset future premiums. D. Dividends are taxable as ordinary income

D

How would you describe the dividend option One Year Term? A. It provides an accidental death benefit. B. It provides additional death benefit equal to the policy cash value. C. It provides permanent term insurance protection. D. It provides a term insurance death benefit that will provide additional coverage for 365 days.

D

If a beneficiary is most concerned with a stated dollar amount of benefit each month, rather than the length of time the benefit will be made, they will probably select which of the following settlement options? A. Fixed Period B. Interest Only C. Life Income D. Fixed Amount

D

Options are available to a policyowner who wishes to surrender their whole life policy. The Non-forfeiture options provide the policyowner with three different options regarding what they can do with the cash value itself. All of the following are Non- forfeiture options EXCEPT: A. Cash Surrender B. Extended Level Term C. Reduced Paid-Up D. One Year Term

D

The non-forfeiture options provide the policyowner with 3 different options regarding what they can do with the cash value of their whole life policy upon policy surrender. All of the following are non-forfeiture options EXCEPT: A. Cash Surrender B. Extended Level Term C. Reduced Paid-Up D. One Year Term

D

What is the individual called who sells his insurance policy to a Viatical Settlement Provider? A. Viaduct B. Vioxx C. Viandoria D. Viator

D

Which answer below describes the dividend option 1 year term? A. it provides an accidental death benefit. B. it provides additional death benefit equal to the policy cash value. C. it provides permanent term insurance protection. D. it provides a term insurance death benefit that will provide additional coverage for 365 days.

D

Which of the following policy riders would waive the premium payment obligation on a policy covering a 9-year-old girl whose parents are tragically killed in an automobile accident? A. Accidental Death rider B. Guaranteed Insurability rider C. Waiver of Premium rider D. Payor rider

D

Which of the following policy riders would waive the premium payment obligation on a policy covering a child whose parents are unable to pay the required premium due to their death or disability? A. Accidental Death B. Guaranteed Insurability C. Wavier of Premium D. Payor Rider

D

Which of the following provides the least expensive form of life insurance protection? A. Level term insurance B. Decreasing term insurance C. Modified life insurance D. Accidental Death Protection

D

Which of the following riders provides an increasing amount of coverage each year based upon changes to the consumer price index? A. Living benefits Rider B. Return of premium rider C. return of cash value rider D. Cost of living rider

D

Which of the following settlement options pays a specified monthly income for as long as the policy proceeds plus interest last? A. Lump sum B. Fixed Period C. Life Income D. Fixed Amount

D

Each of the following events would be paid as a death benefit or principal sum on an AD&D policy rider except: A. A hunter dies after accidentally being shot by a fellow hunter. B. A golfer is struck by lightning while putting on the 7th green. C. A roof collapses on a fireman while he is fighting a fire. D. A fireman suffers a fatal heart attack while playing basketball with his teenage son.

D For an Accidental Death rider to pay the principal or death benefit, the death must be caused by an accident. A heart attack would not be considered an accident.