PSI 14: life insurance policy provisions, options, & riders 8-9

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a cash dividend is usually paid on what schedule?

annually

accumulation at interest is an example of which provision

dividend option

what is the purpose of a life insurance policy's non-forfeiture options?

to protect the policy owner's coverage and/or cash value when the policy is lapsed or surrendered

the selection of which life insurance policy rider will NEVER result in a larger death benefit than the original face amount?

waiver of premium rider

Wyatt owns a universal life policy with an annual minimum premium of $1,200 and an annual target premium of $1,500. For the last 3 years, Wyatt has paid the target premium. If he has a Waiver of Premium Rider and becomes disabled, how much will the rider pay for his policy?

$1,500 each year

life insurance policy dividends are

a return of premium overcharge

Mallory is a producer appointed by a stock company when she sells a whole life policy to Harry. In this situation, Mallory would not be under any obligation to explain what to Harry?

accumulate at interest

the use of which dividend option would create a taxable event?

accumulate at interest

which dividend option triggers an income tax obligation?

accumulate at interest

Paul and John are equal partners in their business which is worth $500,000. They wish to assure that the business will continue in the event of the death of either partner. Which funding arrangement best suits their objective?

each partner purchases a $250,000 policy on the other partner

The feature of a Life Insurance Policy stating that the policy will NOT cover certain risks is known as

exclusion

a dividend paid to a policy owner by a mutual insurance company is

not taxable

which dividend option allows the insured to purchase more benefits and is calculated at the attained age?

one year term

which is the best option if an insured wants to pay off the policy early?

paid up insurance

Frank purchased a $100,000 Life Paid at 65 policy from a mutual insurance company. At age 65, he discovered that he had $135,000 of paid-up life insurance. Which dividend option did he utilize?

paid-up additions

which is the automatic dividend option?

paid-up additions

a juvenile life policy would likely be modified by which rider?

payor benefit

the selection of which life insurance policy rider CANNOT result in an increase in the policy's death benefit?

payor benefit

which of the following provides for the continuance of life insurance coverage on a juvenile in the event of the death or total disability of the individual responsible for the payment of the premiums?

payor clause

which statement concerning universal life is FALSE?

premiums must be paid on a monthly basis

if the declared dividend equals or exceeds the premium, the payment may be suspended. This is an example of which dividend option?

reduction of premium

which statement about the paid-up addition option is TRUE?

the amount of additional coverage is based on the insured's attained age

which does NOT trigger the payment of an accelerated death benefit?

the insured is permanently and totally disabled


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