ch 2 exam Policy Provisions, Options and Riders
Ron has a life insurance policy with a face value of $100,000 and a cost of living rider. If the consumer price index has gone up 4%, how much may Ron increase the face value of the policy?
$4,000
If an insured's age on a life insurance policy has been misstated, what is the insurer's liability if the insured dies?
A prorated death benefit based on the amount of insurance the insured's premiums would have been if purchased at the correct age
What is an insurer required to do when faced with an error made under the Misstatement of Age provision?
Pay age-corrected benefits
Which situation accurately describes a reduced paid-up nonforfeiture option?
Policy has a decreased face amount
Which of the following is a reinstatement condition?
Proof of insurability
A policyowner may exercise which of these dividend options that uses the dividend to pay all or part of the next premium due?
Reduction of premium dividend option
All of these are common exclusions to a life insurance policy EXCEPT
accidental death
An error was made on Mary's life insurance application. Which of the following areas are errors commonly made on applications for which the incontestable clause does NOT apply?
age
Ownership of a life insurance policy may be temporarily transferred with a(n)* collateral assignment
collateral assignment
Life insurance policies will normally pay for losses arising from
commercial aviation
All of these are standard exclusions found in a life insurance policy EXCEPT
disability
A life insurance policy normally contains a provision that restricts coverage in the event of death under all of the following situations EXCEPT
fare-paying passenger
· The suicide clause of a life insurance policy states that if an insured commits suicide within a stated period from the policy's inception, the insurer will only be liable for a return of premiums paid
minus indebtedness and without interest
In order to activate the reinstatement clause of a lapsed life insurance policy, the insured MUST
provide evidence of insurability to the insurer
The two major actions required for a policyholder to comply with the Reinstatement Clause are
provide evidence of insurability, pay past due premiums
Kurt is an active duty serviceman who was recently killed in an accident while home on leave. Which military service exclusion clause would pay upon his death?
results
an endorsement found in an insurance plan which modifies the provisions of the policy is called a .
rider
The free-look provision gives the policyowner
the right to return the policy for a full refund within a specified number of days
A whole life insurance policy accumulates cash value that becomes the policy loan value which the insured may borrow against
· the policy loan value which the insured may borrow against