[3/6] 26% Life (Policy riders, Provisions, Options, and Exclusions)

What type of insurance would be used for a return of premium rider?

increasing term

If a policy has an automatic premium loan provision, what happens if the insured dies before the loan is paid back?

The balance of the loan will be taken out of the death benefit

Which of the following premium payment modes will incur the lowest overall payment? a) annual b) semi-anual c) quarterly d) monthly

a) annual

The ownership provision entitles the policy owner to do all of the following EXCEPT? a) designate a beneficiary b) set premium rates c) receive a policy loan d) assign the policy

b) set premium rates

Under what circumstance would an insurer pay accelerated benefits?

an insured is diagnosed with cancer and needs help paying for her medical treatment.

All the following are dividend options EXCEPT? a) paid-up additions b) fixed-period installments c) accumulated at interest d) reduction of premium

b) fixed-period installments

Which of the following named beneficiaries would NOT be able to receive the death benefit directly from the insurer in the event of the insureds death? a) the wife of the deceased insured b) the former wife of the deceased insured c) a minor son of the insured d) a business partner of the insured

c) a minor son of the insured

A policy owner fails to pay the premium due on his whole life policy after the grace period passes, but the policy remains in force. This is due to what provision? a) Incontestability period b) assignment c) automatic premium loan d) Waiver of premium

c) automatic premium loan

The automatic premium loan provision is activated at the end of the a) Elimination period b) policy period c) grace period d) free-look period

c) grace period

Which of the following is true about the mandatory free look in a life insurance policy? a) It commences when the application is signed b) it applies only to term life insurance policies c) It is optional on all life insurance policies d) It commences when the policy is delivered.

d) it commences when the policy is delivered

If a life policy allows the policyowner to make periodic additions to the face amount at standard rates, without proving insurability, the policy includes a? a) guaranteed insurability rider b) paid-up additions options c) cost of living provision d) nonforfeiture option

a) guaranteed insurability rider

Which of the following explains the policy owner's right to change beneficiaries, choose options, and receive proceeds of a policy a) owner's rights b) The entire contract provision c) the consideration clause d) assignment rights

a) owner's rights

If an insured continually uses the automatic premium loan option to pay the policy premium, a) the policy will terminate then the cash value is reduced to nothing b) the face amount to the policy will be reduced by the automatic premium loan amount. c) the cash value will continue to increase d) the insurer will increase the premium amount

a) the policy will terminate then the cash value is reduced to nothing

An insured pays $1,200 annually for her life insurance premium. The insure applies this years $300 work of accumulated dividends to the next years premium, thus reducing it to $900. What option does this describe? a) accumulation of interest b) cash option c) flexible premium d) reduction of premium

d) reduction of premium

Nonforfeiture values guarantee which of the following for the policyowner? a) that the dividends will be paid annually b) that the death benefit will be paid in a lump sum c) that the policy premiums will never increase d) that the cash value will not be lost

d) that the cash value will not be lost

If a settlement option is not chosen by the beneficiary or policyowner, which option will be used? a) fixed amount b) lump sum c) life income d) fixed period

b) lump sum

The provision which states that both the policy and copy of the application form the contract between the policy owner and the insurer is called the?

Entire contract

What is the benefit of choosing extended term as a nonforfeiture option? a) it can be converted to a fixed annuity b) it has the highest amount of insurance protection c) it matures at age 100 d) it allows for coverage to continue beyond maturity date

b) it has the highest amount of insurance protection

A rider attached to a lie insurance policy that provides coverage on the insured's family members is called the a) payor rider b) other-insured rider c) change of insured rider d) Juvenile rider

b) other-insured rider

Which of the following information will be stated in the consideration clause of a life insurance policy? a) the amount of premium payment b) the parties to the contract c) the time period allowed for the payment of premium d) the condition of insurability

the amount of premium payment

What provision in an insurance policy extends coverage beyond the premium due dat? a) waiver of premium b) grace period c) free look d) Automatic premium loan

b) grace period

Life income joint and survivor settlement option guarantees? a) payout of the entire death benefit b) equal payments to all recipents c) income for 2 or more recipients until they die d) payment of interest on death proceeds

c) income for 2 or more recipients until they die

An insured has a life insurance policy from a participating company and receives quarterly dividends. He has instructed the company to apply the policy dividends to increase the death benefit. The dividend option that the insured has chosen is called? a) one-year term purchase b) accumulation at interest c) reduction of premiums d) paid-up additions

d) paid-up additions

According to the Entire Contract provision, a policy must contain?

A copy of the original application for insurance

An insured pays an annual premium to his insurer. In return, the insurer promises to pay benefits in accordance with the terms of the contract. This is called

Consideration

What would be an advantage to naming a contingent beneficiary in a life insurance policy?

It determines who receives policy benefits if the primary beneficiary is deceased

Which of the following is true of a children's rider added to an insured's permanent life insurance policy?

It is term coverage that is convertible to permanent insurance at or prior to the child reaching the maximum coverage age

If the policy owner, the insured, and the beneficiary under a life insurance policy are three different people, who has the ownership rights?

Policyowner

Children's riders attached to whole life policies are usually issued as what type of insurance?

Term

If a beneficiary wants a guarantee that benefits paid from principal and interest would be paid for a period of 10 years before being exhausted, what settlement option should the beneficiary select? a) life with period certain b) fixed amount c) interest only d) fixed period

d) fixed period

Which of the following settlement options in life insurance is known as straight life? a) fixed amount b) life income c) single life d) life with period certain

b) life income

The sole beneficiary of a life insurance policy die before the insured. If the policy owner fails to change the beneficiary before the insured's death, the proceeds of the policy will go to? a) beneficiary's estate b) the insured's estate c) probate d) the state

b) the insured's estate

When may an insurance company use suicide as a defense against paying a death claim? a) at no time b) when death occurs within a specified period of time after the policy was issued c) only when there was a witness to the event d) at any time suicide can be proven

b) when death occurs within a specified period of time after the policy was issued

What is the purpose of a fixed-period settlement option? a) to provide a guaranteed income for life b) to provide a guaranteed amount of money each month c) to provide a guaranteed income for a certain amount of time d) to settle the insurance company's liability

c) to provide a guaranteed income for a certain amount of time

Which of the following riders would NOT cause the Death Benefit to increase? a) guaranteed insurability rider b) cost of living rider c) accidental death rider d) payor benefit rider

d) payor benefit rider

An insured owns a $50,000 whole life policy. At age 47, the insured decides to cancel his policy and exercise the extended term option for the policy's cash value, which is currently $20,000. What would be the face amount of the new term policy?

50,000

The sole beneficiary of a life insurance policy dies before the insured. If the policy owner fails to change the beneficiary before the insured's death, the proceeds of the policy will go to?

The insured's estate

IF an insured withdraws a portion of the face amount in the form of accelerated benefits because of a terminal illness, how will that affect the payable death benefit form the policy? a) the death benefit will be smaller b) the death benefit will be forfeited c) the death benefit will be the same as the original face amount d) the death benefit will be larger

a) the death benefit will be smaller

What required provision protects against unintentional policy lapse? a) reinstatement b) grace period c) assignment d) payment of premiums

b) grace period

Which of the following is TRUE about nonforfeiture values? a) policy owners do not have the authority to decide how to exercise nonforfeiture values b) they are required by state law to be included in the policy c) they are optional provisions d) a table showing nonforfeiture values for the next 10 years must be included in the policy

b) they are required by state law to be included in the policy

What is true about the spouse term rider? a) coverage is allowed for an unlimited time b) the rider is decreasing term insurance c) Coverage is allowed up to age 75 d) the rider is usually level term insurance

d) the rider is usually level term insurance

Which of the following policy components contains the company's promise to pay? a) owner's rights b) Entire contract provision c) insuring clause d) premium mode

insuring clause

Which provision of a life insurance policy states the insurer's duty to pay benefits upon death of the insured, and to whom the benefits will be paid?

insuring clause

Items stipulated in the contract that the insurer will not provide coverage for are found in the

Exclusion clause

Which of the following statements is TRUE about a policy assignment? a) It permits the beneficiary to designate the person to receive the benefits. b) It authorizes an agent to modify the policy. c) It transfers rights of ownership from the owner to another person. d) It is the same as a beneficiary designation

It transfers rights of ownership form the owner to another person

Which of the following, when attached to a permanent life insurance policy, allows the policy owner to customize the policy to provide an additional amount of temporary insurance on the insured, or allows amounts of temporary insurance to cover other family members?

Term rider

Which is NOT true about beneficiary designations? a) the beneficiary may be a natural person b) the policy does not have to have a beneficiary named in order to be valid. c) trust can be valid beneficiaries d) the beneficiary must have insurable interest in the insured.

the beneficiary must have insurable interest in the insured

Which of the following protects the insured from an unintentional policy lapse due to a nonpayment of premium? a) automatic premium loan b) extended term c) reinstatement d) reduced paid-up option

a) automatic premium loan

Which nonforfeiture option has the highest amount of insurance protection? a) extended term b) conversion c) decreasing term d) reduced paid-up

a) extended term

The dividend option in which the policyowner uses dividends to purchase a term policy for one year is referred to as the a) one-year term option b) paid-up option c) accelerated endowment d) paid-up additions

a) one-year term option

Which rider, when attached to a permanent life insurance policy, provides an amount of insurance on every family member? a) additional insured rider b) family term rider c) spouse rider d) children's rider

b) family term rider

A father purchases a life insurance policy on his teenage daughter and adds the payor benefit rider. In which of the following scenarios will the rider waive the payment of premium?

if the father is disabled for more than 6 months

An insured purchased a life insurance policy on his life naming his wife as the primary beneficiary, and his daughter as contingent beneficiary. Under what circumstances could the daughter collect the death benefit?

If the primary beneficiary predeceases the insured

A couple owns a life insurance policy with a Children's Term rider. The daughter is reaching the maximum age of dependent coverage, so she will have to convert to permanent insurance in the near future. Which of the following will she need to provide for proof of insurability? a) her parents federal income tax receipts b) Medical exam and parents medical history c) proof of insurability is not required d) medical exam

c) proof of insurability is not required

What wold be an advantage to naming a contingent (or secondary) beneficiary in al life insurance policy?

it determines who receives policy benefits if the primary beneficiary deceased

Regarding the free-look provision, the insurance company?

must allow the policy owner to return the policy for a full refund