Life insurance policy provisions, options, and riders

When a policyowner designates a group of individuals as a beneficiary of a life insurance death benefit without specifically naming the individuals, this is called?

class designation

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 option EXCEPT?

interest only

If a settlement option is not chosen by the policyowner or the beneficiary, which option will be used?

lump sum

What happens when a policy is surrendered for its cash value?

Coverage ends and the policy cannot be reinstated

Which of the following riders would NOT cause the death benefit to increase?

Payor Benefit rider

Which of the following riders would not cause the death benefit to increase?

Payor Benefit rider

The policyowner pays for her life insurance annually. Until now, she has collected a nontaxable dividends to help pay for her next premium. What option would allow her to do this?

Reduction of premium

In a case where the primary beneficiary predeceases the insured, in the event of the insured death, the death benefit proceeds will be paid to

The contingent beneficiary

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

Reduced paid-up

What kind of policy allows withdrawals or partial surrenders?

Universal life

An insured and his wife are both involved in a head-on collision. The husband dies instantly, and the wife dies 15 days later. The company pays the death benefit to the estate of the insured. This indicates that the life insurance policy had what provision?

common disaster

When calculating the amount a policyowner may borrow from a variable life policy, what must be subtracted from the policy's cash value?

Outstanding loans and interest

Which of the following best describes fixed-period settlement option?

Both the principal and interest will be liquidated over a selected period of time

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

Mode

Which of the following named beneficiaries would NOT be able to receive the death benefit directly from the insurer in the event of the insureds' death?

A minor son of the insured

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

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

Entire contract

If a policy allows the policyowner to make periodic additions to the face amount at standard rates, without providing insurability, the policy includes a?

Guaranteed insurability rider

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

If the primary beneficiary predeceases the insured

What type of insurance would be used for a return of premium rider?

Increasing term

Life income joint and survivor option guarantees

Income for 2 or more recipients until they die

Which of the following is true about the 10-day free look period in a life insurance policy?

It begins when the policy is delivered

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

What is the purpose of a suicide provision within a life insurance policy?

To protect the insurer from persons who purchase life insurance with the intention of committing suiside

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

Copy of the original application

An insured has had a life insurance policy that he purchased 3 years ago when he was 40 years old. He is killed is 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