Pt. 2 Additional Life Provisions Questions
14. An ins. Company may cancel a life insurance policy under which of the following conditions
A policy loan interest payment has not been paid; The outstanding loan policy exceeds the cash value of the policy.
73. What does the insuring agreement in a Life insurance contract establish
An insurer's basic promise; The insurance policy's grace period.
62. When can a lapsed life insurance policy usually be reinstated
Anytime during the grace period or within 3-5 years of the policy lapsing.
42. Which dividend option allows a policyowner to use his/her dividends to buy life insurance on a single premium basis
Cash option or paid-up additions option.
43. Which of the following dividend options allows the continuation of cash value accumulation
Cash surrender or Reduced paid-up Insurance.
81. Which type of assignment transfers a portion of the policyowner's right to another party in order to secure a debt to that party
Debt assignment; Collateral assignment.
46. The Consideration clause in a life ins. Contract contains what pertinent information
Entire contract or Amount of premium payments and when they are due.
11. Which of the following is considered the "automatic" Nonforfeiture Option that most insurers will use
Extended Term or 1-year term.
8. Which type of life ins. Rider allows a policyowner to increase the leel of coverage to keep up with inflation
Guaranteed insurability rider; or cost of living rider.
58. Which of the following events would allow a policyowner with a guaranteed insurability rider purchase additional life insurance
Having a child; Getting Married or All of the above.
52. Tina has an ins. Policy with a 10-day fre look provision. Which of these statements is correct
Her policy can be returned for 100% refund of the premium within 10 days from the date the policy is delivered or
28 Which of these actions is taken when a policyowner uses a Life Insurane policy as collateral for a bank loan
Revocable assignment; Collateral assignment
5. Who is considered the individual that retains all rights values, and options of an ins. Policy
The beneficiary; the policyowner.
85. Who is considered the individual that retains all rights values, and options of an ins. Policy
The beneficiary; the policyowner.
83. When a misrepresentation on a life ins. Policy application is discovered, what actio may an ins. Co. take
Void the policy if found during the Contestable period or Void the policy, no matter when it is discovered.
92. Which of these life insurance riders allows the applicant to have excess coverage
Waiver of Premium Rider or Term Rider
72. M has an annual life ins. Premium payment due Jan. 1. She died on January 10 without making the premium payment. What action will the insurer take
Deny the claim or Pay face amount minus the past due premium.
59. P is the insured on a participating life policy. Which statement is true if P's premiums are waived due to a disability
P will still receive declared dividends or P will have to pay income taxes on the amount of premiums waived.
76. Which of the following is considered "automatic" Nonforfeiture Option that most insurers will use
Reduced paid-up; Extended term; 1 year term.
70. Ron turned over all rights in his policy over to an assignee. This is called
an absolute assignment or a collateral assignment.
50. A Waiver of Premium
is mandatory in all term life policies or Waives the premiums when the policyowner becomes totally disabled.
68. Policy dividends for life ins. Are
not legal or not guaranteed.
3. M has an ins. 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; cash value
75. When does a Guarantee Insurability Rider allow the insured to buy additional coverage
10 year increments or at future dates specified in the contract with no evidence of insurability required.
66. Which of these provisions require proof of insurability after a policy has lapsed
Insuring; Reinstatement.
53. Rick owns a $100,000 life ins. Policy with a cash value of $10,000. How much can he borrow up to
The policy's face amount $100,000 or The accumulated cash value ($10,000 less interest).
39. S buys a $50,000 whole life policy with a $50,000 Accidental Death and Dismemberment rider. S dies 1 year later of natural clauses. How much will the insurer pay the beneficiary
$10000 or $50,000.00.
60. Peggy surrenders a permanent life policy with a cash value of $15,000 and an outstanding policy loan of $5,000. If she chooses the reduced paid-up option, what will be the result
A paid-up term policy purchased with $10,000 or A paid up permanent policy purchased with $10,000.
6. S ha a Whole Life policy with a premium payment due soon. Which provision would keep the policy in force if S does ot make the required payment and the policy has adequate cash value from which the premium payment can be made
Automatic Policy Loan; Grace period.
30. Which of these are NOT an example of a Nonforfeiture option
Cash Surrender; Life Income.
89. Which dividend option allows a policy owner to use his dividends to buy life insurance on a single premium basis
Cash option; Paid-up additions option.
37. 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 insurer take
Claim will be denied; claim will be paid in full.
7. How do life insurance companies handle cases where the insured commits suicide within the contract's stated Contestable period
Claims are paid in full; or Claims are denied under the Suicide clause of the policy.
78. N is a student pilot with a large life insurance pollicy. Which of these features would limit the insurer's obligation in the event N was killed while flying as a student pilot
Concealment or Exclusion.
32. The incontestable clause allows an insurer to
Contest a claim during the contestable period; disallow a change of beneficiary during the Constestable.
69. A life ins. Policy which ensures that the premium will be paid if the insured becomes disabled has what kind of rider attached
Cost of living or Waiver of Premium.
40. Which of these statements about a Guarateed Insurability Option rider is NOT TRUE
Coverage can be added at specific ages or Evidence of insurability is not required when the option is exercised.
91. Which of these statements about a Guaranteed Insurability Option rider is NOT TRUE
Coverage can be added at specific ages; Evidence of insurability is required when the option is exercised.
12. 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 or Insurer may void the policy if a misstatement of age is discovered.
49. P is blinded in an industrial accident. Which provision of his life ins. Policy will pay a stated benefit amount
Entire contract or Accidental Death and Dismemberment provision.
29. D is the policyowner and insured for a $50,000 life insurance policy. The beneficiary is D's wife. D and his wife divorce and D remarries, transferriing ownership of his policy to his pollicy to his new life. If D dies without making any further changes, to whom will the policy proceeds be paid to
Ex-wife; Current wife.
86. In a Life Insurance contract, an ins. Co's promise to pay stated benefits is called the
Insuring clause; Entire contract.
26. What action can a policyower take if an application for a bank loan requires collateral
Name bank as beneficiary; Assign policy ownership to the bank.
55. Whose life is covered on a life insurance policy that contains a Payor benefit clause
Parent or Child.
27. Which of the following guarantees that premiums will be waived if a Juvenile Life policyowner becomes disabled
Payor clause; Assignment provision.
1. J let her life insurance policy lapse 8 months ago due to nonpayment. She can reestablish coverage under which of the following provisions
Payor clause; Reinstatement provision.
47. What provision in a life ins. Policy states that the application is considered part of the contract
Policy Exclusions or Entire Contract provision.
48. Susan owns a life ins. Policy that has accumulated $10,000 in cash value in which she can no longer pay its premiums. If she elects to take the extended term option, which of these actions would she take
Surrenders that $10,000 cash value and purchases an annuity or Uses the $10,000 to buy term insurance of the same face amount as her original policy.
17. The option that provides an additional death benefit for a limited amount of time at the lowest possible cost is called a
Term Rider or Accidental Death and Dismemberment (AD&D).
24. Which of the following permanent life ins. Policy riders add more coverage for a limited amount of time
Term rider; Waiver of premium Rider
45. Which of the following statements is CORRECT about accelerated death benefits
The full face amount is available as an accelerated benefit or Must have a terminal illness to qualify.
57. Which of these life insurance riders allows the applicant to have excess coverage
Waiver of Premiium rider or Term rider.
2. What does the ownership clause in a life ins. Policy state
Who the policyowner is and what rights the policyowner is entitled to or Ownership cannot be assigned after the incontestable period.
56. The automatic premium loan provision is NOT used in which of the following policies
Whole life policy or Increasing term policy.
20. A collateral assignment allows a policyowner to assign
a portion of the policy proceeds to the assignee; or the cash value to the assignee
63. A policyowner with an automatic premium loa provision must
agree to forfeit the policy if loa is not repaid or pay back the loan amount to keep the policy's cash value at its maximum.
64. The automatic premium loan provision is designed to
avoid a policy lapse or allow a policyower to request a policy loan.
90. The automatic premium loan provision is designed to
avoid a policy lapse; or allow policyowner to request a policy loan.
77. L takes out a life ins. Policy and dies 10 years later. During the claim process, the insurer discovers that L had understated her age on the application. Under the Misstatement of Age provision, the insurer will
deny the claim or adjust the death benefit to a reduced amount.
25. An accidental death rider claim is usually paid if the insured
dies instantaneously; dies within 90 days of the accident.
71. When an insurer issues a policy that refuses to cover certain risks, this is referred to as an
elimination or exlusion.
80. S would like to use dividends from her life insurance policy to purchase paid-up additios. All of these would be factors that determine how much coverage can be purchased EXCEPT
type of insurance or beneficiary's age.
22. Which of the following is an example of a "nonforfeiture value"
A term life ins. Policyowner converts his term life ins. to permanent coverage or After a policy owner cancels his/her perm. Policy, the cash value accumulation must e made available to the policyowner.
61. T took out a $50,000 life ins. Policy with an Accidental Death & Dismemberment rider. Five years later, T commits suicide. How much will the insurer pay
$100,000 or $50,000.
36. Bob has an ins. Policy that allows him to keep the policy in force until the next premium is due plus 30 days thereafter Bob's policy
Must have build cash value; contains a grace period.
16. Which of these is NOT considered to be a right given to a policyowner
Assignment of ownership; Modify a provision in the insurance contract.
54. Which provision prevets an insurer from changing the terms of the contract with the policyowner by referring to documents not found within the policy itself
Assignment or Entire contract.
79. What is the Suicide proision designed to do
Decline an applicant who is contemplating suicide or safeguard the insurer from an applicant who is contemplating suicide.
93. How are surrender charges deducted in a life policy iwth a rear ended loaded provision
Deducted from policy cash value or deducted when the policy is discontinued.
19. How are surrender charges deducted in a life policy with a rear-end loaded provision
Deducted from the benefit or Deducted when the policy is discontinued.
84. How are policyowner dividends treated in regards to income tax
Dividends are not taxable or Interest on accumulations is taxed.
10. D was actively serving in the Marines when he was killed in an automobile acident while on leave. His $100,000 Whole Life policy contains a War Exclusion clause. How much will D's beneficiary's receive
Double the face amount because death was accidental or the full face amount.
51. In a life ins. Policy, which provision states who may select policy options, designate and name a beneficiary, and be the recipient of any financial benefits from the policy
Entire contract or Owner's Rights
87. The option that provides an additional death benefit for a limited amount of time at the lowest possible costs is called a
Family rider; Accidental Death and Dismemberment (AD&D)
38. All of these statements about the Waiver of Premium provision are correct EXCEPT
Insured must be totally disability to quality or Insured must be eligible for Social Security disability for claim to be accepted.
31. The agreement in a life ins. Contract that states a specific sum of money will be paid to a designated person upon an insured's death is called a
Insuring agreement or Entire Contract provision.
23. P purchases a $50,000 term life insurance policy in 2005. One of the questions on the application ask if P engages in scuba divinig, to which P answers "NO". The policy is then issued with no scuba exclusions. P takes up scuba diving and dies in a scuba related accident in 2011. What will the insurer pay to P's beneficiary
Nothing. Claim is denied or $50,000 minus any outstanding policy loans.
13. John has recently died and it was discovered that he was actually ten years older than what was listed on his life ins. Policy. What will the insurer pay his beneficiary
Only the premiums paid into the policy. No death benefit or The amount of ins. That his premiums would have purchased at his correct age.
67. Which of these is a correct statement
Policy dividends cannot be guaranteed; or Whole life ins. Cannot build cash value.
34. A provision in a life ins. Policy that pays the policyowner an amountthat does not surpass the guaranteed cash value is called the
Policy loan provision or Accelerated Benefits portion.
15. Which of the following describe a participating life ins. Policy
Policyowner are entitled to receie dividends or Policyowners pay assessments for the company losses.
33. Which of these actions could result in a lapsed policy
Premium was not paid by the due date or Premium was not paid during the grace period.
82. What benefit does the Payor clause on a Juveile Life policy provide
Premiums are waived if juvenile becomes disabled or Premiums are waived if payor becomes disabled.
44. Which of the following is NOT guaranteed by a whole life policy
Premiums or policy dividends.
4. An insured is past due on his life ins. Premium, but is still within the Grace Period. What will the beneficiary receive if the insured dies during this Grace period
Refund of all premiums paid; Full face amount minus any past due premiums.
41. What action will an insurer take if an interest payment on a policy loan is not made on time
Substract from any dividends owed or automatically add the amount of interest due to the loan balance.
88. Which of these is NOT considered to be a right given to a policyowner
Surrender policy for cash value; Modify a provision in the insurance contract.
18. A life insurance policyownr has just exercised the policy's reduced paidup option. Which of these statements is true
The policy's cash value will stop accumulating; The amount of coverage will be much less than the original coverage.
65. A policyowner with a $100,000 whole life policy has a cash value of $10,000. There is an outstanding loan of $5,000 and a past due premium of $250. If the policyowner chooses the reduced paid-up option and then later dies, what will the beneficiary receive
The reduced paid-up coverage amt. Minus $250 or The reduced paid-up coverage amount minus $5,250.
21. A life insurance producer's agency agreement normally authorizes the license to do all of the following except
solicit insurance; issue policies.