Life, insurance, policy, provisions, options, and writers exam simulator

An insured had a $10,000 term life policy. The annual premium of $200 was due on February 1; however, the insured failed to pay the premium. He died on February 28. How much would the beneficiary receive from the policy?

$9,800

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?

2 years

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 from the policy?

200,000

An insured owns a 50,000 whole life policy. At age 47, the insured decide to cancel his policy and exercise the extended term option for the policies, cash value, which is currently 20,000. What would be the face amount of the new term policy?

50,000

What is the waiting period on a Waiver of Premium rider in life insurance policies?

6 months

According to the Entire Contract provision, a policy must contain

A copy of the original application for insurance

An insured misstated her age at the time the life insurance application is taken. This misstatement may result in.

Adjustment in the amount of death benefit

Who can make changes to the policy once it is in effect?

An executive officer of the insurer

Under which of the following circumstances, would an insurer pay accelerated benefits?

An insured is diagnosed with cancer and needs help paying for her medical treatment

A policy owner 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?

Automatic premium loan

Which of the following is TRUE about a class designation?

Beneficiaries are not identified by name

Which of the following best describes fixed-period Settlement option.

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

An insured receives an annual life insurance dividend check. What term best describes this arrangement?

Cash option

Under which nonforfeiture option does a Company pay the surrender value, and have no further obligations to the policy owner?

Cash surrender

What limits the amount that a policy owner may borrow from your whole life insurance policy?

Cash value

A business owner was trying to obtain a bank loan to find 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

What is the clause that describes the method of paying the death benefit in the event that the insured and beneficiary both killed in the same accident?

Common disaster clause

How long stretch of national economic hardship causes a 7% rate of inflation. A policy owner notices that the face value of her life insurance policy has been raised 7% as a result. Which policy rider caused this change?

Cost of living rider

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

Coverage ends and the policy cannot be reinstated

Jay applied for a life insurance policy on January 10. The policy was issued on January 31. Jay's agent was vacationing at the time of the policy was issued so Jay did not receive the policy until February 18. J decides that he does not want the policy. When would they return the policy to the insurer in order to receive a full refund of premium paid

February 28, or 10 days after the time the policy is delivered

Which is TRUE about the cash surrender nonforfeiture option

Funds exceeding the premium paid are taxable as ordinary income.

Which is TRUE about the cash surrender nonforteiture option?

Funds exceeding the premium pay, are taxable as ordinary income

At the time the insured purchased her life insurance policy, she added a writer that will allow her to purchase additional insurance in the future without having to prove insurability. This rider is called?

Guaranteed insurability

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

Guaranteed insurability option

An individual is purchasing a permanent life insurance policy with the face amount value of 25,000. Well, this is all the insurance that he can afford at this time, he wants to be sure that the additional coverage will be available in the future. Which of the following options should be included in this policy?

Guaranteed insurability option

If a life policy allows the policy owner to make periodic additions to the face amount at standard rates, without proving insurability, the policy includes a

Guaranteed insurability rider

A father purchases a life insurance policy on his teenage daughter, and as the payer benefit rider. In which of the following scenarios will a rider waive the payment of premium

If the father is disabled for more than six months

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

If the primary beneficiary predeceases the insured

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 a death benefit??

If the primary beneficiary predeceases the insured

The policy owner 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 policy owner choose?

Interest only option

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

What would be an advantage to naming a contingent ( or secondary) beneficiary on a life insurance policy?

It determines who receives policy benefits if the primary beneficiary is deceased.

Which of the following is true of a children's rider added to an insured's permanent life insurance policy?

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?

It remains the same no matter how many children are added to the policy

Which of the following is true about the premium on the children's writer in a life insurance policy?

It remains the same no matter how many children are added to the policy

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

It requires the policyowner to pay all overdue premiums with interest before the policy is reinstated.

Which of the following statements is true concerning the accidental death rider

It will pay double or triple the face amount

After a back injury, and insured is disabled for a year. His insurance policy carries a disability income benefit rider which of the following benefits will he receive?

Monthly premium waiver and monthly income

A rider attached to a life insurance policy that provides coverage on the insured's family member is called the

Other-insured rider

Which of the following explains the policy owners right to change, beneficiaries, choose option, and receive proceeds of a policy?

Owners rights

An insured has had a life insurance policy that he purchased or years ago when he was 40 years old. He was killed in an automobile accident, and it is discovered that he is actually 45 years old and not 43. I stated on the application. What will the company do?

Pay reduce death benefit

An insured purchased a life policy in 2010, and died in 2020. The insurance company discovers at that time that the insured had misstated information about her insurance history on the application. What will the insurer do?

Pay the death benefit

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

Payor Benefit Rider

Which of the following allows the insurer to relieve a minor insured from premium payments if the minors parents have died, or become disabled

Payor benefit

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

Policy owner

The policy owner pays for her life insurance annually until now, she has collected a nontaxable dividend check each year. She has decided that she would rather use a difference to pay for her next premium. What option would allow her to do this?

Reduction of premium

An insured commit suicide, one year after his life insurance policy was issued. The insurer will.

Refund the premiums paid

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?

Reinstatement provision

When an insured under a life insurance policy died, the designated beneficiary receive the face amount of the policy, as well as a refund of all the premiums paid. Which writer is attached to the policy?

Return Of premium

When an insured under a life insurance policy died, the designated beneficiary receive the face amount of the policy, as well as a refund of all the premiums paid. Which rider is attached to the policy.?

Return of premium

A policy owner 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 policy owner should have her husband named as the.

Revocable beneficiary

The ownership provision entitles the policy owner to do all of the following, except

Set premium rates

Which settlement option provides a single beneficiary with income for the rest of his or her life

Single life

When a life insurance policy stipulates that the beneficiary will receive payments in specified installments, or for a specified number of years, what provision prevents the beneficiary from changing or borrowing from the plant installments?

Spendthrift provision

Which of the following statements about a suicide clause in a life insurance policy is TRUE?

Suicide is excluded for a specific period of years and covered thereafter.

The interest earned on policy dividends is

Taxable

Upon the death of the insured, the primary beneficiary discovers that the insured chose the interest only settlement option. What does this mean?

The beneficiary will only receive payments of the interest earned on the death benefit.

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

The contingent beneficiary

When a life insurance policy was issued, the policy owner designated a primary and a contingent beneficiary. Several years later, both the insured and the primary beneficiary died in the same car accident, and it was impossible to determine who died first. Which of the following would receive the death benefit?

The insurance contingent beneficiary

A father owns a life insurance policy on his 15 year old daughter. The policy contains the optional payer benefit rider. If the father becomes disabled, what will happen to the life insurance premium?

The insurance premium will be waived until she's 21

All of the following are true statements regarding the accumulation at interest option, except

The interest is not taxable since it remains inside the insurance policy.

What is the advantage of reinstating a policy instead of applying for a new one?

The original age is used for premium determination

An insured stops making payments on a loan from this cash value policy. What will most likely happen?

The policy will terminate with the loan amount with interest equals, or exceeds the cash value

The owner of a life insurance policy wishes to name two beneficiaries for the policy proceeds. What will the soliciting insurance producer say?

The policyowner can specify the way proceeds are split in the policy.

Which is true about a spouse term rider?

The rider is usually level term insurance

All of the following are true regarding the guaranteed insurability rider EXCEPT

This rider is available to all insureds with no additional premium.

The paid-up addition option uses the dividend

To purchase a smaller amount of the same type of insurance as the original policy.

The waiver of cost of insurance rider is found in what type of insurance?

Universal Life

How long will the beneficiary receive payments under the single life settlement option?

Until the beneficiary's death

The rider in a whole life policy that allows the company to forgo collecting the premium if the insured is disabled is called

Waiver of Premium

The two types of assignments are

absolute and collateral

What limits the amount that a policy owner may borrow from a whole life insurance policy?

cash value

The automatic premium loan provision is activated at the end of the

grace period

What required provision protects against unintentional lapse of the policy?

grace period

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

it permits the insured to return the policy for a full refund of premiums paid

Which of the following is true regarding a single life settlement option?

it provides income the beneficiary cannot outlive

What is the other term for the cash payment settlement option?

lump sum

All of the following are beneficiary designations EXCEPT

specified