Life Policy Provisions, Rider and Options Chapter 3

Question 1 of 15 Which nonforfeiture option has the highest amount of insurance protection?

Extended Term

Question 9 of 15 Which of the following is TRUE about nonforfeiture values?

They are required by state law to be included in the policy

Question 14 of 15 An absolute assignment is a

Transfer of all ownership rights in a policy

Question 7 of 15 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

Question 6 of 15 Which option is being utilized when the insurer accumulates dividends at interest and then uses the accumulated dividends, plus interest, and the policy cash value to pay the policy up early?

Paid-up option

Question 2 of 15 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?

Pay a reduced death benefit

Question 9 of 15 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?

Payor Benefit

Question 6 of 15 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

Question 10 of 15 What is the waiting period on a Waiver of Premium rider in life insurance policies?

6 months

Question 8 of 15 According to the Entire Contract provision, a policy must contain

A copy of the original application for insurance

Question 1 of 15 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 of the insured

Question 4 of 15 Which of the following is NOT typically excluded from life policies?

Death due to plane crash for a fare-paying passenger

Question 14 of 15 Which rider, when attached to a permanent life insurance policy, provides an amount of insurance on every family member?

Family term rider

Question 11 of 15 When the policyowner specifies a dollar amount in which installments are to be paid, he/she has chosen which settlement option?

Fixed amount

Question 13 of 15 What required provision protects against unintentional lapse of the policy?

Grace period

Question 12 of 15 At the time the insured purchased her life insurance policy, she added a rider that will allow her to purchase additional insurance in the future without having to prove insurability. This rider is called

Guaranteed insurability

Question 15 of 15 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

Guaranteed insurability rider

Question 15 of 15 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?

Interest only option

Question 5 of 15 What is the purpose of a free-look period in insurance policies?

It allows the insured to reject the policy with a full refund

Question 8 of 15 Which of the following is true about the mandatory free look in a Life Insurance policy?

It commences when the policy is delivered

Question 5 of 15 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

Question 7 of 15 Which of the following statements is TRUE concerning the Accidental Death Rider?

It will pay double or triple the face amount

Question 3 of 15 Who can request changes in premium payments, face value, loans, and policy plans?

Policyowner

Question 4 of 15 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 of the premiums paid. Which rider is attached to the policy?

Return of premium

Question 3 of 15 The interest earned on policy dividends is

Taxable

Question 12 of 15 Which of the following, when attached to a permanent life insurance policy, allows the policyowner to customize the policy to provide an additional amount of temporary insurance on the insured, or allows amounts of temporary insurance to cover other family members?

Term rider

Question 10 of 15 The insured had his wife named as the beneficiary of his life insurance policy. To ensure that his wife had income for life after the insured's death, he chose the life income settlement option. The amount of payments will be determined by taking into account all of the following EXCEPT

The insured age at death

Question 2 of 15 Which of the following statements is TRUE concerning irrevocable beneficiaries?

They can be changed only with the written consent of that beneficiary

Question 11 of 15 All of the following are true regarding the guaranteed insurability rider EXCEPT

This rider is available to all insureds with no additional premium

Question 13 of 15 The paid-up addition option uses the dividend

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