Primerica Session D Chapter 5 Policy Provisions, Riders and options (Chapter Quiz, Snapshots, and review Questions)

10 day free look period of a new life insurance policy commences when...

the policy is delivered

What settlement options are available in the life insurance policies?

Cash payment (lump-sum) life income, interest only, fixed-period installments, and fixed-amount installments.

A spouse recieves 5k a month until the principal and interest on her husband's insurance policy has been paid out. Which settlement option did this beneficiary choose?

Fixed amount

What is the free-look period, and when does it begin?

The free-look period allows *the policy owner a specified number of days from receipt to look over the policy* and if dissatisfied for any reason, return it for a full refund of premium. It *starts when the policy owner receives the policy*, not when the insurer issues the policy.

*Which provision* of a life insurance policy *states that the application is part of the contract?

Entire contract clause

What constitutes the entire contract?

Thepolcy copy of the application, any riders or amendents

The insured pays 1200 annually for her life insurance premium. This year, she has accumulated 175 worth of dividends, which she applies to her next premium, thus reducing it to 1025. What dividend option has the insured chosen?

Reduction of premium

What is the difference between absolute and collateral assignment?

*Absolute* assignment *permanently transfers* all rights of the ownership to another person or entity. A *collateral assignment* is a *transfer of partial rights* to another person.

A feature that allows an insurance policy to *remain in force for a specific number of days beyond the premium due* date?

Grace period

What is the purpose of the automatic premium loan provision?

It *prevents the unintentional lapse of a policy due to non payment* of the premium.

Cash surrender value, Extended Term, Reduced Paid-up Insurance Are All ....

non forfeiture options in life insurance policies

Which riders increase the amount of the death benefit?

*Accident death rider*-pays double or tiple the amount of face value, *cost of living rider*, automatically increases the amount of the insurance based on tan inflation index, *return of premium*- pays back all the premiums in addition to the death benefit.

A *contingent beneficiary designation* in a life insurance policy is a person who will receive benefits if the

*Insured dies* when there is *no* surviving* primary beneficiary

Which dividend option increases the death benefit?

*Paid-up additions* increase the death benefit of the original policy by whatever amount the dividend will buy.

Aviation, Military service and Hazardous occupation are...

All standard exclusions in life insurance policies

Which terms refers to the transfer of some or all of the ownership rights of a life insurance policy?

Assignment

The life insurance policy provision that *prevents an insurance company from denying payment* of a death claim after a specified period of time due to statements in the application is known as the

Incontestability provision

An insured will be allowed to *reactivate her lapsed life insurance policy if action is taken within a certain period and proof of insurability is provided. This is accomplished under the

Reinstatement provision

What is the purpose of a grace period?

To prevent *unintentional policy lapse for non payment* of premiums

the mandatory free-look period in a life insurance policy begins when....

the policy is delivered.

When a death claim is submitted, the insurer discovered that the insured understated her age on the application for a life policy. What action will the insurer take?

*Pay a reduced death benefit* based on the insured's actual age

The *purpose* of the *automatic Premium loan rider* is to

*Protect against* an unintentional *lapse* of coverage

If an individual *commits suicide within six months* after purchasing an insurance policy, the insurer will

*Return the premium* paid

What are the 3 forfeiture options in life insurance policies?

Cash surrender value, reduced paid-up insurance or extended term option

Assignment refers to

the transfer of some or all of the ownership rights of a life insurance policy from one individual t another

What is the difference between a revocable and irrevocable beneficiary?

The *policy owner may change a revocable beneficiary at any time*. An *irrevocable designation*, however, may *not be changed without the written consent of the beneficiary*.

An insured intentionally understates her age on her application for a life policy. AT death the insurer will take which of the following actions?

Pay a reduced Death benefit based on the insured's actual age.

three thing the insured must to do reinstate a life insurance policy....

Pay back premiums Pay any interest due on back premiums repay any outstanding loans and interest

Which non forfeiture option is automatically selected if the policy owner has not made a selection?

If the policy owner has neglected to select one of these non forfeiture options, the insurer will automatically implement *the extended term option* in the event of termination of the original policy.

A policy owner that has an *irrevocable beneficiary cannot request policy changes* unless the

Irrevocable *beneficiary signs* the change request

What clause is designed to *protect* the proceeds of the life insurance *from creditors* of the beneficiary?

Spendthrift

Because of an injury, an insured has been unable to work for 7 months. He wasn't able to pay his life insurance policy premium, yet the policy remained in force. The policy includes:

*Waiver of premium* rider.

Under what circumstances will the contingent beneficiary receive the death benefit?

If the primary beneficiary dies before the insured.

What happens to an unpaid policy loan at insured's death?

If there are outstanding loans at the time of the insured's death, the amount will be considered a debt to the policy and the death *benefit will be reduced by the amount of indebtedness*.