policy, provisions, options, and riders
K pays on a $20,000.20 year endowment policy for 10 years and dies from an automobile accident. How much will the insurance company pay the beneficiary
$20,000 death benefit
A buys a $50,000 whole life policy with a $50,000 accidental death and dismemberment rider. S dies one year later of natural causes. How much will the insurer pay the beneficiary?
$50,000
T took out a $50,000 life insurance policy with an Accidental Death and Dismemberment rider. Five years later, T commits suicide. How much will the insurer pay?
$50,000
P purchases a $50,000 whole life insurance policy in 2005. One of the questions on the application asks if P engages in scuba diving, to which P answers "No". The policy is then issued with no scuba exclusions. In 2010, P takes up scuba diving and dies in a scuba-related accident in 2011. What will the insurer pay to P's beneficiary?
$50,000 minus any outstanding policy loans
A potential client, age 40, would like to purchase a Whole Life policy that will accumulate cash value at a faster rate in the early years of the policy. Which of these statements made by the producer would be correct?
20-Pay Life accumulates cash value faster than Straight Life
An insurer may normally delay the payment of cash value loan, or surrender value for up to
6 months
The option that provides an additional death benefit for a limited amount of time at the lowest possible cost is called a
Accidental Death and Dismemberment rider (AD&D)
P is blind it in industrial accident. Which provisions of his life insurance policy will pay a stated benefit amount.
Accidental death and dismemberment clause
A policy owner may generate taxable income from which of the following dividend options
Accumulation at interest
Cost-of-living writer gives the insured
Additional death benefits
The consideration clause in a life insurance contract contains what pertinent information
Amount of premium payments and when they are due
What action can a policy owner take if an application for a bank loan requires collateral
Assign policy ownership to the bank
What action will ensure take if an interest payment on a policy loan is not made on time
Automatically add the amount of interest due to the loan balance
Policy loan is made possible by which of these life insurance policy features
Cash value provision
Which writer provides coverage for a child under a parents life insurance policy
Child term rider
N is covered by a term life policy and does not make the required premium payment which was due August 1. N dies September 15. What action will the insured take?
Claim will be denied
how do I have insurance companies handle cases where the insured commits suicide within the contract stated contestable period
Claims are denied under the suicide clause of the policy
Which of these actions taken when I policyowner uses a life insurance policy as collateral for a bank loan?
Collateral assignment
Which statement regarding the misstatement of age provision is considered to be true
Coverage will be adjusted to reflect the insured's true age if a misstatement of age is discovered
Which of these types of policies may not have the automatic, premium loan provision attached to it
Decreasing term
Which provision prevents an insurer from changing the terms of the contract with the policy owner by referring to documents not found within the policy itself
Entire Contract provision
What provision in a life insurance policy states of the application is considered part of the contract
Entire contract provision
which of these statements about a guaranteed insurability option rider is not true
Evidence of insurability is required when the option is exercised
N is a student pilot with a large life insurance policy. Which of these features would limit the insurance application in the event, and was killed while flying as a student pilot.
Exclusion
Which of the following nonforfeiture options offer is the highest death benefit
Extended term option
All of these statements, but the waiver of premium provision are correct, except
Insured must be eligible for Social Security disability, for claim to be accepted
The life, insurance, contract, and insurance companies promise to pay stated benefits is called the
Insuring clause
How are policy owner dividends treated in regards to income tax
Interest on accumulations is taxed
All of the settlement options involve the systematic liquidation of the death proceeds in the event of the insurance stuff, except
Interest only
B receives yearly dividends and interest from a participating life insurance policy. Which of these should be included as gross income for federal income tax purposes
Interest only
Which of the following statements about accumulated interest earned on dividends from an insurance policy is true
It is taxed as ordinary income
K's whole life, insurance policy lapsed two months ago due to nonpayment. She would like to reinstate the policy. All of these statements are correct about the policies reinstatement, except.
K must forfeit the right to use the automatic loan provision upon reinstatement
Which of these are not an example of a nonforfeiture option?
Life Income
accelerated death, benefit provision in a life insurance policy is also known
Living benefit
And insured in ability to perform two or more activities of daily living, may trigger which type of life policy rider
Long-term care
Which of these is not considered to be a right given to the policy owner
Modify a provision in the insurance contract
Which of the following statements is correct about accelerated death benefits
Must have a terminal illness to qualify
All these statements concerning settlement options are true, except
Only the beneficiary may select
P is the insured on a participating life policy. Which statement is true, appears premiums are waived due to disability.
P will still receive declared dividends
K owns a whole life policy. If K once an increasing death benefit to protect against inflation, which dividend option, should she choose?
Paid up additional insurance
all of the following statements are true regarding a policies, Grace period except.
Past due premiums are waived
which statement is true in regards to a policy loan
Past-due interest on a policy loan is added to the total debt
M had an animal life insurance premium payment due January 1. She died January 10 without making the premium payment. What action should the insurer take?
Pay face amount minus the past due premium
which of the following provisions guarantees that premiums will be waived if a juvenile life policy owner becomes disabled
Payor clause
Provision in a life insurance policy that pays the policy owner and amount that does not surpass the guaranteed cash value is called the
Policy Loan provision
M has an insurance policy that also has an outstanding policy loan at the time of M's death. The insurer will deduct the outstanding loan balance from the.
Policy proceeds
The ____ is authorized to assign a life insurance policy as collateral for a loan
Policyowner
The _____ has the right to change a life insurance policy's beneficiary
Policyowner
Which of these nonforfeiture options continue a buildup of cash value
Reduced Paid-Up
Which of these provisions require proof of insurability after policy has lapsed
Reinstatement
J let her life insurance policy lapse eight months ago due to nonpayment. She can reestablish coverage under which of the following provisions?
Reinstatement provision
D was actively serving in the Marines when he was killed in an automobile accident while on leave. His 100 and thousand dollar whole life policy contains a war exclusion clause. How much would D's beneficiary receive?
The full face amount
The consideration clause in a life insurance policy indicates that a policy owners consideration consist of a completed application and
The initial premium
Advantage of reinstating an original life policy is
The premiums are based on a younger age
The free look provision begins
Upon receipt of the policy by the policyowner
I love insurance policy owner would like to take out a policy loan against the cash value in his whole life policy. The interest rate applied to the Sloan Mayberry overtime. This is referred to as a ___ rate loan
Variable
Which type of life policy contains a monthly mortality charge, as well as self-directed investment choices
Variable Universal Life
Which of these types of life insurance allows the policy owner to have a level premiums into also choose for my selection of investment options
Variable life
A life insurance policy which ensures that the premium will be paid if the insured becomes disabled has what kind of rider attached
Waiver of Premium
When is the face amount of a whole life policy paid?
When the insured dies or at the policy's maturity date, whichever happens first
What does the ownership clause in a life insurance policy state?
Who the policyowner is and what rights the policyowner is entitled to
A return of premium life insurance policy is
Whole life and Increasing term
B owns a Whole Life policy with a guaranteed insurability option that allows him to purchase, without evidence of insurability, stated amounts of
additional Whole Life coverage at specified times
A term life writer offers the insured
additional life coverage
L takes over life insurance policy and dies 10 years later. During the claim process, the insured discovers that L had understated her age on the application. Under the misstatement of age provision, the insurer will.
adjust the death benefit to a reduced amount
What is the insuring agreement and a life insurance contract establish
an insurance basic promise
When does a guaranteed insurability rider allow the insured to buy additional coverage?
at future dates specified in the contract with no evidence of insurability required
S has a whole life policy with a premium payment due soon. Which provision would keep the policy in force if S does not make the required payment and the policy has an adequate cash value from which the premium payment can be made
automatic policy loan
The automatic premium loan provision is designed to
avoid a policy lapse
P died five years after purchasing a life policy. While investigating the claim, the insured discovered material misrepresentation made by P during the application process. Which of these actions will the insurer take
beneficiary will be paid the death benefit
S would like to use dividends from her life insurance policy to purchase paid up additions. All of these would be factors that determine how much coverage can be purchased, except.
beneficiary's age
Variable Whole Life Insurance can be described as
both an insurance and securities product
A whole life insurance policy owner does not have the right to
change the grace period
Who's life is covered in my life insurance policy that contains a payor benefit clause
child
The incontestable clause allows an insurer to
contest a claim during the contestable period
Additional coverage can be added to a whole life policy by adding
decreasing term rider
how are surrender charges deducted in a life policy with a rear and loaded provision
deducted when the policy is discontinued
D is the policy owner and insured for a $50,000 life insurance policy. The beneficiary is D's wife. D and his wife divorce and D remarries, transferring ownership of the policy to his new wife. D dies without making any further changes to whom will the policy proceeds be paid to
ex-wife
In a life insurance policy, which feature states that the policy will not cover certain risks
exclusion
when an insurer issues a policy that refuses to cover certain risks, this is referred to as an
exclusion
D I want a whole life policy that was purchased 10 years ago. It's a premium payment suddenly stop and he takes no additional action, which nonforfeiture option, will the insurer likely proceed with
extended term
What a misrepresentation on a life insurance policy application is discovered, what action Mann insurance company take
for the policy, only if it is discovered during the contestable period, and proven to be material
and insured is past due on his life, insurance premium, but it still within the grace period. What will the beneficiary receive if the insured dies during this Grace period
full face amount minus any past due premiums
The purpose of the ________ Period clause is to avoid an unintentional lapse of a life insurance policy.
grace
A nonforfeiture clause, gives the policy owner
guaranteed values even if the policy has lapsed
A long-term care writer in a life insurance policy pays a daily benefit in the event of which of the following
inability of the insured to perform more than two activities of daily living
The agreement in a life insurance, contract that states a specific sum of the money will be paid to a designated person upon insurance death is called.
insuring agreement
The accidental death and dismemberment provision in a life insurance policy would pay additional benefits if the insured
is blinded in an accident
Dividends paid from a life insurance policy are
issued by the insurer
And a life insurance policy, which provision states who makes life policy options, designate a name, a beneficiary, and be the recipient of any financial benefits from the policy
owners rights
B recently died and was insured with a life insurance policy for over five years. During the claims process, the insurer discovered that B had understated his age by 5 years at the time of application. In this situation, the insurer will
pay the amount that the premium would have purchased at the correct age
Which life insurance rider typically appears on a juvenile life insurance policy
payor benefit rider
What benefit does the pay or clause on a juvenile life policy provide
premiums are waived if the payor becomes disabled
Which of the following is an example of a nonforfeiture option?
reduced paid-up option
The provision that can be used to put an insurance policy back-and-forth after it is lapse due to nonpayment is called
reinstatement
S buys a $10,000 whole life policy in 2003 and pays an annual premium of $100. S dies five years later in 2008 in the insurer pays the beneficiary $10,500. What kind of rider did S include on the policy?
return of premium rider
What is the suicide provision designed to do?
safeguard the insurer from an applicant who is contemplating suicide
Typically a life insurance death benefit is paid by a lump-sum payment. A(n) __________ option is a method of distributing a Life Insurance policy's death benefit OTHER than by a lump sum payment.
settlement
A _____ writer may be used to include coverage for children under their parents life insurance policy
term
which of these life insurance writers allows the applicant do you have excess coverage?
term rider