Life insurance policy provisions, options & riders
No, only when the owner is the beneficiary
Is the beneficiary required to have insurable interest in the insured.
Double indemnity
The insurer will pay a benefit of twice the face amount
Pay reduced death benefit
The insured is 10 yrs older than he stated on the app. What will the insurer do regarding death benefit?
Cash surrender, reduced paid up, extended
3 non forfeiture options in life insurance policies
Cash surrender, reduced paid-up, extended term
3 nonforfeiture options in life insurance policies?
When it may alter the underwriting decision
When would a misrepresentation be considered material?
The death benefit will be adjusted to the amount that the insured could obtain for her correct age.
An applicant for life insurance misstates her age on the policy app. How will this affect the death benefit?
Yes, the suicide was committed after the restricting period
An insured purchased a life policy, & then committed suicide 5 years later. Will the company pay the benefit?
Settlement option
Describes methods of payment of the death benefit to the beneficiary upon the insured's death
Grace period
Provision in life insurance policy that extends coverage beyond the premium due date
To allow the insured to return the policy with a full refund
Purpose of a free-look period?
Return of unused premiums
What are policy dividends?
Paid-up additions
What dividend option can increase the death benefit of an existing life policy
Paid-up additions
What dividend option is automatically selected by the company if not chosen by the policy owner?
Prevent lapse of a policy because of nonpayment of the premium
What is the purpose of the Automatic Premium loan provision?
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What is the reduction of premium dividend option, how is the dividend used?
Waiver of premium
What life policy rider allows the company to forgo collecting the premium if the insured becomes disabled?
Grace period
What required provision protects against unintentional policy lapse?
Lump-sum/cash, fixed period, fixed amount, life income, interest only
What settlement options are available in life insurance policies?
Settlement options
What term is used to describe methods of payment of the death benefit to the beneficiary upon the insured's death
Collateral assignment
What type of assignment is used to secure the payment of debt with an existing life insurance policy?
When the primary beneficiary dies before the insured
When will a contingent beneficiary receive death benefit from life insurance policy?
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Which 2 types of policy assignments requires transfer of all ownership rights in the policy to a third party?
Absolute assignment
Which of the 2 types of policy assignments requires transfer of all ownership rights in the policy to a third party
Policy owner
Who controls changes in premium payments, face values, & loans in a life insurance policy?
A copy of the original insurance app
To meet the requirement of the entire contract policy provision, an insurance policy must contain what?
A promise to pay policy benefits
What is consideration on the part of the insurer
When a suicide is committed within a specified period of time after the policy is purchased (usually 2 years)
When can an insurance company use suicide as a defense against paying a death claim?
Revocable
Type of beneficiary that can be changed at any point by the policy owner
Statements made by the app that are true to the best of applicant's knowledge
What are representations on life insurance app
Cash, reduced premium, accumulation at interest, paid-up additions, paid-up options, 1 yr term, & acceleration of endowment
What are the dividend options in life insurance policies?
Primary beneficiary
What beneficiary designation had first claim to the death proceeds of a life insurance policy?
Policy premium in a reinstated policy will be set according to the insured's original age.
What is the advantage of reinstating a life insurance policy as opposed to applying for a new one?
Policy proceeds are retained by the insurance company; only the interest is paid to the beneficiary
With the interest only settlement option, what happens to the policy's death benefit
The contingent beneficiary
Who does the common disaster clause protect
Contingent beneficiary
Who does the common disaster clause protect?
Policyowner
Who has the right to the cash value of a life insurance policy?
Policy proceeds are retained by the insurance company; only the instead is paid to the beneficiary
With the interest only settlement option, what happens to the policy's death benefit?