Ch. 4 Part 2 Exam Questions (Life) - Policy Provisions, Options, and Riders
Which life insurance policy option allows the policy owner to have coverage equal to the net death benefit of the lapsed policy?
Extended term nonforfeiture option
Which life insurance policy provision allows a policyowner to cancel the policy and receive a full refund within a limited time period after policy delivery?
Free-look period
What is the name of the rider that provides an additional purchase option in a life insurance policy?
Guaranteed insurability rider
Which of the following is NOT subject to the promise to pay in an insuring clause?
How the premium is calculated
Which life insurance clause prohibits an insurance company from questioning the validity of the contract after a stated period of time has passed?
Incontestable clause
Which of these statements is NOT true regarding a cash value loan against a life insurance policy?
Interest payments made by Policyowner are tax-deductible
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
An insured has a $25,000 whole life insurance policy with $6,000 cash value available. Under the extended term nonforfeiture option, what is the amount of insurance available to the insured?
$25,000
How long can an insurer legally defer paying the cash value of a surrendered life insurance policy?
6 months
The absolute assignment of a life insurance policy results in
All incidents of ownership transferred to the assignee
Which of the following is NOT guaranteed in a whole life policy?
Dividend Scale
How may an insurance company classify an accidental death benefit on a life policy?
As an optional policy rider
In the event of premium default, which life insurance provision will use the cash value to keep the policy in force?
Automatic premium loan
Which statement regarding the waiver of premium rider is accurate?
Cash payment is not directly provided to the policyowner
Which of these is NOT a true statement of the war exclusion?
Civil insurrections apply
In what way is a life insurance policy affected by an accelerated benefit payment?
Decreases the death benefit
A life insurance guaranteed insurability rider gives the insured the right, without proving insurability, to
Periodically purchase additional insurance
What happens to a life insurance policy when the policy loan balance exceeds the cash value?
Policy will no longer be in force
Which statement regarding the life insurance premium for a children's rider is true?
Premium remains the same no matter how many children
How is the insured protected if a payor benefit rider is attached to the life insurance policy?
Premiums are waived in the event the payor becomes disabled or dies
Which of the following is NOT a dividend option for a life insurance policy?
Receiving the entire policy cash value
What happens to the death benefit of a life insurance policy if the insured elects a partial payment from the accelerated (living) benefit provision?
Reduced
What effect can a long-term care benefit rider have on a life insurance policy?
Reduced death benefit
What could be the potential result of taking out a cash value loan under a life insurance policy?
Reduces the amount receivable upon surrender of the contract
How is a collateral assignment used in a life insurance contract?
Transfers specific ownership rights to a creditor