Chapt. 3 quiz

What is the waiting period on a waiver of premium rider in life Insurance policies?

6 months

An insured has a continuous premium whole life policy. She would like to use the policy dividends to pay off her policy soon than would have been possible otherwise. What dividend option could she use?

Accumulate dividend

Under which nonforfeiture option does the company pay the surrender value and have no further obligations to the policyowner?

Cash surrender

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

The life Insurance policy clause that prevents an insurance company from denying payment of a death claim after a specified period of time is known as

Incontestability clause

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

Increasing term

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

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

If a settlement option is not chosen by the policy owner or the beneficiary, what option will be used by the insurer?

Lump-sum payment

A insured has a life Insurance policy from a participating company and receive quarterly dividends. He has instructed the company to pay the policy difference to increase the debt benefit. The dividend option that the insured chosen is called

Paid up additions

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

Policyowner

Nonforfeiture Options

Three options available by law to policyowners that enable them to recover a policy's cash-value upon surrender of that policy. (1) Cash (2) Reduced Paid-Up Insurance (3) Extended Term Insurance

What kind of policy allows withdrawals or partial surrenders?

Universal Life

A father owns a life insurance policy on his 15-year-old daughter. The policy contains the optional Payor Benefit rider. If the father becomes disabled, what will happen to the life insurance premiums?

the insured's premiums will be waived until she is 21.