XCEL Chapter 4: Life Insurance Policies - Provisions, Options and Riders
How is a collateral assignment used in a life insurance contract?
Transfers specific ownership rights to a creditor
Which of these would NOT be a valid reason to add the waiver of premium rider to a life insurance policy?
It allows a policy loan to cover premium payments if the policyowner becomes totally disabled
After the extended term life nonforfeiture option is chosen, the available insurance will be
Level term for a stated period of time
Which of these is NOT a common life insurance nonforfeiture option?
Life income annuity
Tim is confined to a nursing home but doesn't have a terminal illness. Which life insurance rider is designed to help pay for this type of expense?
Long-term care benefit rider
Which of these statements accurately portrays an adjustable life insurance policy?
Policy can alternate between forms of term and whole life insurance
Which of the following is a TRUE statement regarding universal life insurance?
Policy indicates how much of each premium is used toward company expenses
Straight whole life insurance can be accurately described in all of these statements EXCEPT
Policy protection normally expires at age 65
How is the insured protected if a payor benefit rider is attached to the life insurance policy?
Premium payments are waived in the event the premium payor dies or becomes disabled
Which statement regarding the life insurance premium for a children's rider is true?
Premium remains the same no matter how many children
An individual who purchases a modified life insurance policy expects
An improvement in future income
When does the insured stop making payments under a thirty-payment whole life policy?
At the time of death or 30 years after the policy's inception, whichever comes first
A life insurance policyowner would like a dividend option that results in a limited current outlay of funds. Which dividend option would be chosen?
Reduction of premium payment
In the event of premium default, which life insurance provision will use the cash value to keep the policy in force?
Automatic premium loan
When a lapsed policy's premium has been paid current, it has the potential of being...
Reinstated
When a ten year renewable term life insurance policy issued at age 45 is renewed, the premium rate will be the current rate for
Ten year term insurance for a person aged 55
Which of these statements regarding the extended term insurance nonforfeiture option in a life policy is accurate?
The premium to purchase the coverage comes from the policy's cash value
Which of the following statements about universal life insurance is NOT true?
Universal life insurance normally has a minimum guaranteed cash value for duration of the policy
How long does protection normally extend to under a limited pay whole life policy?
Until age 100
An insurance policy that can also be classified as a securities product is called
Variable life
When can a life insurance policy be issued WITHOUT the insured's consent?
When a parent purchases a policy on the life of a minor child
When would evidence of insurability be required for a person already covered with a variable universal life policy?
When the death benefit is increased
A policyowner is permitted to take out a policy loan on a whole life policy at what point?
When the policy has a cash value
Which type of life insurance policy is best suited for paying off the outstanding balance of a 30-year mortgage in the event of the insured's death?
30-year decreasing term
How long can an insurer defer paying the cash value of a surrendered life insurance policy?
6 months
Group credit life insurance is typically a form of
Decreasing term insurance
Which of the following is NOT guaranteed in a whole life policy?
Dividend scale
Scott has a life insurance policy in which dividends are left with the insurance company. This particular policy may be paid up when the cash value plus accumulated dividends...
Equal the net single premium for the same face amount at the insured's attained age
Which life insurance policy option allows the policyowner to have coverage equal to the net death benefit of the lapsed policy?
Extended term nonforfeiture option
All of these are considered feature of whole life insurance EXCEPT
Initial premium is lower than for an equivalent amount of term insurance
Assets that back the non-guaranteed values of variable life insurance products are held in which account?
Separate account set up by the insurer
Which statement regarding whole life insurance is accurate?
Insurance coverage can continue for life
An insured has $25,000 whole life insurance policy with $6,000 cash value available. Under the extended term nonfofeiture option, what is the amount of insurance available to the insured?
$25,000
A "premature" distribution from a modified endowment contract (MEC) incurs a penalty tax of
10%
John received a one-time distribution of $50,000 from his modified endowment contract (MEC). Prior to that, the contact's cash value was $150,000, the contract investment amount was $100,000, and the death benefit was $500,000. What percentage of the $50,000 distribution was taxable as ordinary income?
100%
A life insurance policy that contains an accelerated (living) benefit rider will provide funds if the...
Insured is expected to be confined to a nursing home for life
The death proceeds of a credit life insurance policy are typically paid to the
Lender
A survivorship life insurance policy usually covers how many lives?
2
Which statement regarding the cash value of a whole life insurance policy is correct?
Available to the policy owner when policy has been surrendered
Which of these life insurance policies does NOT contain a cash value provision?
Decreasing term life
Which of the followings is NOT subject to the promise to pay in an insuring clause?
How the premium is calculated
What is payable to the policyowner if a whole life policy is surrendered prior to its maturity date?
The cash value
