Life Insurance Life Only

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

Transfer of all ownership rights in a policy.

An absolute assignment is a

By Feb. 18, or within 10 days of policy delivery

An individual applied for a life insurance policy on Jan. 10. The policy was issued on Jan. 31; however, because the insured's agent was on vacation at that time, the policy was not delivered until Feb. 8. After reading through the policy provisions, the insured decided to return the policy to the insurer. When would the insured need to return the policy for a refund of premium?

Pay a reduced death benefit The incontestability clause prevents an insurer from denying a claim due to statements in an application after the policy has been in force for 2 years. However, it does not apply to statements relating to age, sex and identity.

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?

Reinstatement provision A lapsed policy may be reinstated within 3 years by paying back premiums, with interest, and proving insurability.

An insured will be allowed to reactivate her lapsed life insurance policy if action is taken within a certain period of time, and proof of insurability is provided. Which policy provision allows this?

Entire Contract

The provision which states that both the policy and a copy of the application form the contract between the policyowner and the insurer is called the

Absolute and collateral

The two types of assignments are

Copy of the original application

According to the entire contract provision, what document must be made part of the insurance policy?

Policyowner

If the policyowner, the insured, and the beneficiary under a life insurance policy are three different people, who has the ownership rights?

1. Designate a beneficiary. 2. Receive a policy loan. 3. Assign the policy. Answer. Except Set premium rates.

The Ownership provision entitles the policyowner to do all of the following EXCEPT

Grace period

What provision in an insurance policy extends coverage beyond the premium due date?

It permits the insured to reject the policy with a full refund.

Which of the following applies to the 10-day free-look privilege?

Owner's Rights

Which of the following explains the policyowner's right to change beneficiaries, choose options, and receive proceeds of a policy?

A. It provides for reinstatement of a policy regardless of the insured's health. B. It guarantees the reinstatement of a policy that has been surrendered for cash. Answer C. It requires the policyowner to pay all overdue premiums with interest before the policy is reinstated. D. It permits reinstatement within 10 years after a policy has lapsed.

Which of the following statements about the reinstatement provision is true?

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

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