Life Insurance Policy Provisions, Options, and Riders
What type of account will most likely be established for a minor? A. Credit life B. Estate planning C. Trust D. Annuity
C. Trust
In order to reduce the premium, an insurer can backdate a life policy up to A. 1 year B. 30 days C. 90 days D. 6 months
D. 6 months
The Waiver of Cost of Insurance rider is found in what type of insurance? A. Joint and Survivor B. Juvenile Life C. Universal Life D. Whole Life
C. Universal Life
Which of the following riders would NOT cause the Death Benefit to increase? A. Accidental Death Rider B. Payor Benefit Rider C. Guaranteed Insurability Rider D. Cost of Living Rider
B. Payor Benefit Rider
The rider in a whole life policy that allows the company to forgo collecting the premium if the insured is disabled is called A. Guaranteed insurability B. Waiver of cost of insurance C. Payor benefit D. Waiver of premium
D. Waiver of premium
The paid-up addition option uses the dividend A. To reduce next year's premium B. To accumulate additional savings for retirement C. To purchase a smaller amount of the same type of insurance as the original policy D. To purchase a one-year term insurance in the amount of the cash value
C. To purchase a smaller amount of the same type of insurance as the original policy
Which of the following is true regarding a single life settlement option? A. Payments continued until the entire principal is exhausted B. Proceeds are paid out in a lump sum C. It provides income for a specified period of time D. It provides income the beneficiary cannot outlive
D. It provides income the beneficiary cannot outlive
Who can request changes in premium payments, face value, loans, and policy plans? A. Producer B. Policyowner C. Contingent beneficiary D. Beneficiary
B. Policyowner
An insured purchased a 15-year level term life insurance policy with a face amount of $100,000. The policy contained an accidental death rider, offering a double indemnity benefit. The insured was severely injured in an auto accident, and after 10 weeks of hospitalization, died from the injuries. What amount would his beneficiary receive as a settlement? A. $0 B. $100,000 C. $200,000 D. $100,000 plus the total of paid premiums
C. $200,000
What is the waiting period on a Waiver of Premium rider in life insurance policies? A. 30 days B. 3 months C. 5 months D. 6 months
D. 6 months
What is the benefit of choosing extended term as a nonforfeiture option? A. It matures at age 100 B. It allows for coverage to continue beyond maturity date C. It can be converted to a fixed annuity D. It has the highest amount of insurance protection
D. It has the highest amount of insurance protection
When a reduced-paid up nonforfeiture option is chosen, what happens to the face amount of the policy? A. It is increased when extra premiums are paid B. It decreases over the term of the policy C. It remains the same as the original policy, regardless of any differences in value D. It is reduced to the amount of what the cash value would buy as a single premium
D. It is reduced to the amount of what the cash value would buy as a single premium
What is the other term for the cash payment settlement option? A. Principal amount B. Face amount C. Proceeds D. Lump sum
D. Lump sum
After a back injury, an insured is disabled for a year. His insurance policy carries a Disability Income Benefit rider. Which of the following benefits will he receive? A. Percentage of medical costs paid by the insurer B. Payments for life C. Yearly premium waiver and income D. Monthly premium waiver and monthly income
D. Monthly premium waiver and monthly income
Children's riders attached to whole life policies are usually issued as what type of insurance? A. Variable life B. Adjustable life C. Whole life D. Term
D. Term
Which is TRUE about the cash surrender nonforfeiture option? A. Funds exceeding the premium paid are taxable as ordinary income B. After the cash surrender, the insured is covered for a grace period of one month C. The policy remains active for some time after the policyholder opts for cash surrender D. The policyowner receives the original cash value of the policy
A. Funds exceeding the premium paid are taxable as ordinary income
Which of the following best describes fixed-period settlement option? A. Only the death principal amount will be paid out within a specified period of time B. The death benefit must be paid out in a lump sum within a certain period of time C. Income is guaranteed for the life of the beneficiary D. Both the principal and interest will be liquidated over a selected period of time
D. Both the principal will be liquidated over a selected period of time
All of the following are true regarding the guaranteed insurability rider EXCEPT A. This rider is available to all insureds with no additional premium B. The insured may purchase additional coverage at the attained age C. The insured may purchase additional insurance up to the amount specific in the base policy D. It allows the insured to purchase additional amounts of insurance without providing insurability only at specified dates or events
A. This rider is available to all insureds with no additional premium
The two types of assignments are A. Absolute and collateral B. Absolute and partial C. Complete and partial D. Complete and proportionate
A. Absolute and collateral
Which of the following premium payment modes will incur the lowest overall payment? A. Annual B. Semi-annual C. Quarterly D. Monthly
A. Annual
Under which nonforfeiture option does the company pay the surrender value and have no further obligations to the policyowner? A. Cash surrender B. Reduced paid-up C. Paid-up options D. Extended term
A. Cash surrender
The rider in a whole life policy that allows the company to forgo collecting the premium if the insured is disabled is called A. Waiver of premium B. Guaranteed insurability C. Waiver of cost of insurance D. Payor benefit
A. Waiver of premium
The interest earned on policy dividends is A. Tax deductible B. 40% taxable, similar to a capital gain C. Taxable D. Nontaxable
C. Taxable
The validity of coverage under a life insurance policy may not be contested, except for nonpayment of premium, after the policy has been in force for at least how many years? A. 1 year B. 2 year C. 5 years D. 7 years
B. 2 years
Which of the following is TRUE about the 10-day free-look period in a Life Insurance policy? A. It is optional on all life insurance policies B. It begings when the policy is delivered C. It begins when the application is signed D. It applies only to term life insurance policies
B. It begins when the policy is delivered
All of the following are TRUE statements regarding the accumulation at interest option EXCEPT A. The interest is credited at a rate specified by the policy B. The policyholder has the right to withdraw the accumulations at any time C. The interest is not taxable since it remains inside the insurance policy D. The annual dividend is retained by the company
C. The interest is not taxable since it remains inside the insurance policy
The automatic premium loan provision is activated at the end of the A. Free-look period B. Elimination period C. Policy period D. Grace period
D. Grace period
Which of the following statements is TRUE concerning the Accidental Death Rider? A. It is also known as a triple indemnity rider B. This rider is only available to insureds over the age of 65 C. It is only available in group insurance D. It will pay double or triple the face amount
D. It will pay double or triple the face amount
If a life policy allows the policyowner to make periodic additions to the face amount at standard rates, without proving insurability, the policy includes a A. Nonforfeiture option B. Guaranteed insurability rider C. Paid-up additions option D. Cost of living provision
B. Guaranteed insurability rider
All of the following are beneficiary designations EXCEPT A. Specified B. Tertiary C. Contingent D. Primary
A. Specified
The owner of a life insurance policy wishes to name two beneficiaries for the policy proceeds. What will the soliciting insurance producer say? A. The policyowner can specify the way the proceeds are split in the policy B. The way proceeds are split between beneficiaries is decided by which type of policy is chosen C. Life insurance policies may have only one beneficiary D. The proceeds will be split evenly between the two beneficiaries
A. The policyowner can specify the way the proceeds are split in the policy
The insured under a $100,000 life insurance policy with a triple indemnity rider for accidental death was killed in a car accident. It was determined that the accident was his fault. The triple indemnity rider in the policy specifies that the death must not be contributed to by the insured in any manner. In this case, what will the policy beneficiary receive? A. $0 B. $50,000 (50% of the policy value C. $100,000 D. $300,000
C. $100,000
When a reduced paid-up nonforfeiture option is chosen, what happens to the face amount of the policy? A. It is increased when extra premiums are paid B. It decreases over the term of the policy C. It remains the same as the original policy, regardless of any differences in value D. It is reduced to the amount of what the cash value would buy as a single premium
D. It is reduced to the amount of what the cash value would buy as a single premium
If an insured withdraws a portion of the face amount in the form of accelerated benefits because of a terminal illness, how will that affect the payable death benefit from the policy? A. The death benefit will be smaller B. The death benefit will be forfeited C. The death benefit will be the same as the original face amount D. The death benefit will be larger
A. The death benefit will be smaller
Which of the following statements about the reinstatement provision is true? A. It guarantees the reinstatement of a policy that has been surrendered for cash B. It requires the policyowner to pay all overdue premiums with interest before the policy is reinstated C. It permits reinstatement within 10 years after a policy has lapsed D. It provides for reinstatement of a policy regardless of the insured's health
B. It requires the policyowner to pay all overdue premiums with interest before the policy is reinstated
The Ownership provision entitles the policyowner to do all of the following EXCEPT A. Set premium rates B. Receive a policy loan C. Assign the policy D. Designate a beneficiary
A. Set premium rates
Upon the death of the insured, the primary beneficiary discovers that the insured chose the interest only settlement option. What does this mean? A. The beneficiary must pay interest to the insurer B. The beneficiary will receive the lump sum, plus interest C. The primary beneficiary will receive the death benefit and the secondary beneficiaries will share the interest payments D. The beneficiary will only receive payments of the interest earned on the death benefit.
D. The beneficiary will only receive payments of the interest earned on the death benefit
Which of the following is true about the premium on the children's rider in a life insurance policy? A. It remains the same no matter how many children are added to the policy B. It decreases when the oldest child reaches the age of 21 C. It increases when a newborn baby is added to the policy D. It decreases when an adopted child is added to the policy
A. It remains the same no matter how many children are added to the policy
Which of the following applies to the 10-day free look privilege? A. It is granted only at the option of the agent B. It permits the insured to return the policy for a full refund of premiums paid C. It allows the insured 10 days to pay the initial premium D. It can be waived only by the insurance company
B. It permits the insured to return the policy for a full refund of premiums paid
A couple owns a life insurance policy with a Children's Term rider. Their daughter is reaching the maximum age of dependent coverage, so she will have to convert to permanent insurance in the near future. Which of the following will she need to provide for proof of insurability? A. Her parents' federal income tax receipts B. Medical exam and parents' medical history C. Proof of insurability is not required D. Medical exam
C. Proof of insurability is not required
Which of the following named beneficiaries would NOT be able to receive the death benefit directly from the insured in the event of the insureds' death? A. A business partner of the insured B. The wife of the deceased insured C. The former wife of the deceased insured D. A minor son of the insured
D. A minor son of the insured
Which is true about a spouse term rider? A. Coverage is allowed for an unlimited time B. The rider is decreasing term insurance C. Coverage is allowed up to age 75 D. The rider is usually level term insurance
D. The rider is usually level term insurance
An insured owns a $50,000 whole life policy. At age 47, the insured decides to cancel his policy and exercise the extended term option for the policy's cash value, which is currently $20,000. What would be the face amount of the new term policy? A. $20,000 B. $25,000 C. $50,000 D. The face amount will be determined by the insurer
C. $50,000
Which nonforfeiture option has the highest amount of insurance protection? A. Decreasing Term B. Reduced Paid-up C. Extended Term D. Conversion
C. Extended Term
If a benficiary wants a guarantee that benefits paid from principal and interest would be paid for a period of 10 years before being exhausted, what settlement option should the beneficiary select? A. Life with period certain B. Fixed amount C. Interest only D. Fixed period
D. Fixed period
Which of the following is true of a children's rider added to an insured's permanent life insurance policy? A. Each child covered must show evidence of insurability B. It is term coverage that is convertible to permanent insurance at or prior to the child reaching the maximum coverage age C. It is permanent insurance D. The policy covers only the natural children of the insured
B. It is term coverage that is convertible to permanent insurance at or prior to the child reaching the maximum coverage age
Which of the following is true about the premium on the children's rider in a life insurance policy? A. It decreases when an adopted child is added to the policy B. It remains the same no matter how many children are added to the policy C. It decreases when the oldest child reaches the age of 21 D. It increases when a newborn baby is added to the policy
B. It remains the same no matter how many children are added to the policy
An insured has a life insurance policy from participating company and receives quarterly dividends. He has instructed the company to apply the policy dividends to increase the death benefit. The dividend option that the insured has chosen is called A. Reduction of premiums B. Paid-up additions C. One-year term purchase D. Accumulation at interest
B. Paid-up additions
Under an extended term nonforfeiture option, the policy cash value is converted to A. A higher face amount that the whole life policy B. The same face amount as in the whole life policy C. The face amount equal to the cash value D. A lower face amount than the whole life policy
B. The same face amount as in the whole life policy
How long will the beneficiary receive payments under the single life settlement option? A. Until the insured's age 100 B. Until the beneficiary's death C. Until the insured's death D. For a specified period of time
B. Until the beneficiary's death
The policyowner wants to make sure that upon his death, the life policy will pay a portion of the proceeds annually to his spouse, but that the principal will be paid to their children when they reach a certain age. Which settlement option should the policyowner choose? A. Joint and survivor B. Fixed amount option C. Interest only option D. Life income with period certain
C. Interest only option
What is the purpose of a fixed-period settlement option? A. To provide a guaranteed income for life B. To provide a guaranteed amount of money each month C. To provide a guaranteed income for a certain amount of time D. To settle the insurance company's liability
C. To provide a guaranteed income for a certain amount of time
The Waiver of Cost of Insurance rider is found in what type of insurance? A. Joint and Survivor B. Juvenile Life C. Universal Life D. Whole Life
C. Universal Life
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? A. Waiver of premium provision B. Incontestable clause C. Grace period D. Reinstatement provision
D. Reinstatement provision
Which of the following statements is TRUE concerning irrevocable beneficiaries? A. They may be changed at any time B. They can never be changed C. They may be changed only on the anniversary date of the policy D. They can be changed only with the written consent of that beneficiary
D. They can be changed only with the written consent of that beneficiary
An individual is purchasing a permanent life insurance policy with a face value of $25,000. While this is all the insurance that he can afford at this time, he wants to be sure that additional coverage will be available in the future. Which of the following options should be included in the policy? A. Guaranteed insurability option B. Dividend options C. Guaranteed renewable option D. Nonforfeiture options
A. Guaranteed insurability option
When a policyowner designates a group of individuals as the beneficiary of a life insurance death benefit without specifically naming the individuals, this is called A. Irrevocable designation B. Stirpes designation C. Class designation D. Revocable designation
C. Class designation
What required provision protects against unintentional lapse of the policy? A. Payment of premiums B. Reinstatement C. Grace period D. Assignment
C. Grace period
An insured stops making payments on a loan taken from his cash value policy. What will most likely happen? A. The insurer will increase the interest rate on the loan and charge a penalty B. The insurer will not permit the policyowner to take out any more loans C. The policy will be reduced to an extended term option D. The policy will terminate when the loan amount with interest equals or exceeds the cash value
D. The policy will terminate when the loan amount with interest equals or exceeds the cash value
A long stretch of national economic hardship causes a 7% rate of inflation. A policyowner noticies that the face value of her life insurance policy has been raised 7% as a result. Which policy rider caused this change? A. Inflation Rider B. Cost of Living Rider C. Value Adjustment Rider D. Return of Premium Rider
B. Cost of Living Rider
What is the term for how frequently a policyowner is required to pay the policy premium? A. Mode B. Schedule C. Grace period D. Consideration
A. Mode
A policyowner 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? A. Assignment B. Automatic premium loan C. Waiver of premium D. Incontestability period
B. Automatic premium loan
What type of insurance would be used for a Return of Premium rider? A. Decreasing Term B. Annually Renewable Term C. Increasing Term D. Level Term
C. Increasing Term
Which of the following riders would NOT cause the Death Benefit to increase? A. Cost of Living Rider B. Accidental Death Rider C. Payor Benefit Rider D. Guaranteed Insurability Rider
C. Payor Benefit Rider
Which settlement option provides a single beneficiary with income for the rest of his/her life? A. Single Life B. Fixed amount C. Lump Sum D. Retained Assets
A. Single Life
A father purchases a life insurance policy on his teenage daughter and adds the Payor Benefit rider. In which of the following scenarios will the rider waive the payment of premium? A. If the daughter is disabled for any length of time B. If the father is disabled for more than 6 months C. If the father is disabled for at least a year D. If the daughter is disabled for more than 3 months
B. If the father is disabled for more than 6 months
What would be an advantage to naming a contingent (or secondary) beneficiary in a life insurance policy? A. It requires that someone who is not the primary beneficiary handles the estate B. It determines who receives the policy benefits if the primary beneficiary is deceased C. It allows creditors to receive payment out of the proceeds D. It ensures the policy proceeds will be split between the primary and contingent beneficiaries
B. It determines who receives the policy benefits if the primary beneficiary is deceased
Upon the death of the insured, the primary beneficiary discovers that the insured chose the interest only settlement option. What does this mean? A. The beneficiary will receive the lump sum, plus interest B. The primary beneficiary will receive the death benefit and the secondary beneficiaries will share the interest payments C. The beneficiary will only receive payments of the interest earned on the death benefit D. The beneficiary must pay interest to the insurer
C. The beneficiary will only receive payments of the interest earned on the death benefit
Under an extended term nonforfeiture option, the policy cash value is converted to A. A lower face amount than the whole life policy B. A higher face amount than the whole life policy C. The same face amount as in the whole life policy D. The face amount equal to the cash value
C. The same amount as in the whole life policy
Which of the following is NOT typically excluded from life policies? A. Self-inflicted death B. Death that occurs while a person is committing a felony C. Death due to war or military service D. Death due to plane crash for a fare-paying passenger
D. Death due to plane crash for a fare-paying passenger
Which rider, when attached to a permanent life insurance policy, provides an amount of insurance on every family member? A. Spouse rider B. Children's rider C. Additional insured rider D. Family term rider
D. Family term rider
Which nonforfeiture option provides coverage for the longest period of time? A. Extended term B. Paid-up option C. Accumulated at interest D. Reduced paid-up
D. Reduced paid-up
What limits the amount that a policyowner may borrow from a whole life insurance policy? A. Cash value B. Premiums paid C. Amount stated in the policy D. Face amount
A. Cash value
When the insured selects the extended term nonforfeiture option, the cash value will be used to purchase term insurance with what face amount? A. Equal to the original policy for as long as the cash values will purchase B. In lesser amounts for the remaining policy term of age 100 C. Equal to the cash value surrendered from the policy D. The same as the original policy minus the cash value
A. Equal to the original policy for as long as the cash values will purchase
Which of the following allows the insurer to relieve a minor insured from premium payments if the minor's parents have died or become disabled? A. Payor Benefit B. Jumping Juvenile C. Juvenile Premium Provision D. Waiver of Premium
A. Payor Benefit
If a life policy allows the policyowner to make periodic additions to the face amount at standard rates, without proving insurability, the policy includes a A. Guaranteed insurability rider B. Paid-up additions option C. Cost of living provision D. Nonforfeiture option
A. Guaranteed insurability rider
The policyowner payts for her life insurance annually. Until now, she has collected a nontaxable dividend check each year. She has decided that she would rather use the dividends to help pay for her next premium. What option would allow her to do this? A. Reduction of premium B. Paid-up addition C. Accumulation at interest D. Cash option
A. Reduction of premium
When an insured under a life insurance policy died, the designated beneficiary received the face amount of the policy, as well as a refund of all the premiums paid. Which rider is attached to the policy? A. Return of premium B. Cost of living C. Decreasing term D. Accidental death
A. Return of premium
When the insured selects the extended term nonforfeiture option, the cash value will be used to purchase term insurance with what face amount? A. The same as the original policy minus the cash value B. Equal to the original policy for as long as the cash values will purchase C. In lesser amounts for the remaining policy term of age 100 D. Equal to the cash value surrender for the policy
B. Equal to the original policy for as long as the cash values will purchase
Which of the following is TRUE about a class designation? A. Beneficiaries are not identified by name B. Beneficiaries must be part of the insured's immediate family C. It is not allowed D. It determines the succession of beneficiaries
A. Beneficiaries are not identified by name
If a settlement option is not chosen by the policyowner or the beneficiary, which option will be used? A. Life income B. Fixed period C. Fixed amount D. Lump sum
D. Lump sum
Which is TRUE about the cash surrender nonforfeiture option? A. Funds exceeding the premium paid are taxable as ordinary income B. After the cash surrender, the insured is covered for a grace period of one month C. The policy remains active for some time after the policyholder opts for cash surrender D. The policyholder receives the original cash value of the policy
A. Funds exceeding the premium paid are taxable as ordinary income
The dividend option in which the policyowner uses dividends to purchase a term policy for one year is referred to as the A. One-year term option B. Paid-up option C. Accelerated endowment D. Paid-up additions
A. One-year term option
Which of the following statements is TRUE about a policy assignment? A. It is the same as a beneficiary designation B. It permits the beneficiary to designate the person to receive the benefits C. It authorizes an agent to modify the policy D. It transfers rights of ownership from the owner to another person
D. It transfers rights of ownership from the owner to another person
An insured misstates her age at the time the life insurance application is taken. This misstatement may result in A. Recession of the policy B. Adjustment in the amount of death benefit C. No change whatsoever D. Automatic lapse
B. Adjustment in the amount of death benefit
An absolute assignment is a A. Transfer of some ownership rights in a policy B. Change of beneficiary C. Change of insurer D. Transfer of all ownership rights in a policy
D. Transfer of all ownership rights in a policy
What is the least amount of time a life policy can allow for insureds to take legal action against their insurer for a particular act? A. 4 years B. 6 years C. 8 years D. 2 years
B. 6 years
Who can make changes to the policy once it is in effect? A. The agent B. An executive officer of the insurer C. The insured D. The policyowner
B. An executive officer of the insurer
An insured receives an annual life insurance dividend check. What term best describes this arrangement? A. Accumulation at Interest B. Cash option C. Reduction of Premium D. Annual Dividend Provision
B. Cash option
Using a class designation for beneficiaries means A. Not naming beneficiaries B. Naming an estate as the beneficiary C. Naming each beneficiary by his or her name D. Naming beneficiaries as a group
D. Naming beneficiaries as a group
Which of the following explains the policyowner's right to change beneficiaries, choose options, and receive proceeds of a policy? A. The Entire Contract Provisions B. The Consideration Clause C. Assignment Rights D. Owner's Rights
D. Owner's Rights
A rider that may be attached to a life insurance policy that will adjust the face amount based upon a specific index, such as the Consumer Price Index, is called A. Living need rider B. Payor rider C. Cost of living rider D. Accelerated benefit rider
C. Cost of living rider
What happens when a policy is surrendered for its cash value? A. The policy can be reinstated by paying back all policy loans and premiums B. The policy can be converted to term coverage C. Coverage ends and the policy cannot be reinstated D. Coverage ends but the policy can be reinstated at any time
C. Coverage ends and the policy cannot be reinstated
A rider attached to a life insurance policy that provides coverage on the insured's family members is called the A. Juvenile rider B. Payor rider C. Other-insured rider D. Change of insured rider
C. Other-insured rider
J applied for a life insurance policy on January 10. The policy was issued on January 31. J's agent was vacationing at the time the policy was issued, so J did not receive the policy until February 18. J decides that he does not want the policy. When would J need to return the policy to the insurer in order to receive a full refund of premium paid? A. Anytime, because the agent did not deliver the policy promptly B. February 28th, or 10 days after the time the policy is delivered C. The time varies from one policy to another D. It was already too late when J received the policy because the 10-day free-look period had expired
B. February 28th, or 10 days after the time the policy is delivered
An insured pays $1,200 annually for her life insurance premium. The insured applies this year's $300 worth of accumulated dividends to the next year's premium, thus reducing it to $900. What option does this describe? A. Flexible Premium B. Reduction of Premium C. Accumulation at Interest D. Cash option
B. Reduction of Premium
In a case where the primary beneficiary predeceases the insured, in the event of the insured's death, the death benefit proceeds will be paid to A. The policyowner B. The insurance company C. The contingent beneficiary D. The insured's spouse
C. The contingent beneficiary
According to the Entire Contract provision, a policy must contain A. A declarations page with a summary of insureds B. Buyer's guide to life insurance C. Listing of the insured's former insurer for incontestability provisions D. A copy of the original application for insurance
D. A copy od the original application for insurance
A father owns a life insurance policy on his 15 year old daughter. The policy contains the optional Payor Benefit rider. If the father becomes disabled, what will happen to the life insurance premiums? A. The premiums will become tax deductible until the insured's 18th birthday B. Since it is the policyowner, and not the insured, who has become disabled, the life insurance policy will not be affected C. The insured will have to pay premiums for 6 months. If at the end of this period the father is still disabled, the insured will be refunded the premiums D. The insured's premiums will be waived until she is 21
D. The insured's premiums will be waived until she is 21
A policyowner who is also the insured wants to name her husband as the beneficiary of her life policy. She also wishes to retain all of the rights of ownership. The policyowner should have her husband named as the A. Secondary beneficiary B. Contingent beneficiary C. Irrevocable beneficiary D. Revocable beneficiary
D. Revocable beneficiary
An insured purchased a life insurance policy on his life naming his wife as primary beneficiary, and his daughter as contingent beneficiary. Under what circumstances could the daughter collect the death benefit? A. When the insured dies, the primary and contingent beneficiaries share death benefits equally B. With the primary beneficiary's written consent C. If the insured died from accidental means D. If the primary beneficiary predeceased the insured
D. If the primary beneficiary predeceased the insured
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? A. Pay the full death benefit and refund excess premium B. Pay a reduced death benefit C. Pay the full death benefit D. Pay nothing; there was a misrepresentation on the application
B. Pay a refuced death benefit
What is the advantage of reinstating a policy instead of applying for a new one? A. The face amount can be increased B. The cash values have gained interest while the policy was lapsed C. The original age is used for premium determination D. Proof of insurability is not required
C. The original age is used for premium determination
Which of the following provisions would not be allowed as a part of a life insurance policy issued in Michigan? A. A provision that allows for a settlement option that is equal to the face amount of the policy B. A provision that allows that insurer to cancel the policy for nonpayment if the amount of a policy loan, plus interest, exceeds the existing cash value of the policy C. A provision that allows the policyowner to initiate a legal action against the insurer within 6 years after the cause of action D. A provision that allows the effective date of the policy to be backdated up to 8 months in order to effect a lower premium rate for the insured
D. A provision that allows the effective date of the policy to be backdated up to 8 months in order to effect a lower premium rate for the insured
