Life Insurance Practice Questions (chapter 3)

entire contract

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

copy of the original application

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

fixed amount

when the policyowner specifies a dollar amount in which installments are to be paid, he/she has chosen which settlement option?

owner's rights

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

coverage ends and the policy cannot be reinstated

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

that the cash value will not be lost

nonforfeiture values guarantee which of the following for policyowner?

it requires the policy owner to pay all overdue premiums with interest before the policy is reinstated.

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

suicide is excluded for a specific period of years and covered thereafter

which of the following statements about a suicide clause in a life insurance policy is true?

cost of living rider

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

paid-up option

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?

cost of living rider

a 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 cause this change?

exclusions clause

items stipulated in the contract that the insurer will not provide coverage for are found in the

settlement options

methods used to pay the death benefits to a beneficiary upon the insured's death are called

one-year term option

the dividend option in which the policy owner uses dividends to purchase a term policy for one year is referred to as the

waiver of premium

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

to provide a guaranteed income for a certain amount of time

what is the purpose of a fixed-period settlement option?

increasing term

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

the amount of premium payment

which of the following information will be stated in the consideration clause of a life insurance policy?

to protect the insurer from persons who purchase life insurance with the intention of committing suicide

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

6 months

what is the waiting period on a waiver of premium rider in life insurance?

purchase a single premium policy for a reduced face amount

when a whole life policy lapses or is surrendered prior to maturity, the cash value can be used to

automatic premium loan

which of the following protects the insured from an unintentional policy lapse due to a nonpayment of premium?

it will pay double or triple the face amount

which of the following statements is TRUE concerning the accidental death rider?