Chapter 2 Exam -- Life Provisions

The automatic premium loan provision authorizes an insurer to withdraw from a policy's cash value the amount of:

Past due premiums that have not been paid by the end of the grace period

What is an insurer required to do when faced with an error made under the Misstatement of Age provision?

Pay age-corrected benefits

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.

Which of these is considered to be a Living Benefit option in a life insurance policy?

Accelerated Death Benefit

The double indemnity provision in a life insurance policy pertains to an insured's death caused by a(n):

Accident

What is NOT a valid policy dividend option for a life insurance policyowner?

Accumulate without interest

What dividend option is taxable?

Accumulation of Interest

What is NOT part of an insurance contract?

Certificate of Authority

Ownership of a life insurance policy may be temporarily transferred with a(n):

Collateral Assignment

What is NOT a standard exclusion found in a life insurance policy?

Disability

A life insurance policyowner was injured in an automobile accident which results in a total and permanent disability. Which rider would pay a monthly amount because of this disability?

Disability Income Rider

What is the name of the provision which states that a copy of the application must be attached to the policy when issued?

Entire Contract

A life insurance rider that allows an individual to purchase insurance as the grow older, regardless of insurability, is called a(n):

Guaranteed Insurability Rider

This person's policy includes a rider which allows her to purchase additional insurance at specific dates or events without evidence of insurability. This rider is called a(n):

Guaranteed Insurability Rider

A double indemnity benefit will be payable to the beneficiary if:

Insured dies instantly from a car accident

What is the purpose for having an accelerated death benefit on a life insurance policy?

It allows for cash advantages to be paid against the death benefit if the insured becomes terminally ill

What is NOT considered to be a common life insurance nonforfeiture option?

Life Income Annuity

This policy/provision applies when the policyowner's death occurs due to an accident:

Life Insurance Policy's Double Indemnity Provision

A Guaranteed Issue Insurance policy has no...

Medical Underwriting

This person has a $100,000 whole life policy with an accumulated $25,000 of cash value. They would like to borrow $15,000 against the cash value. What is TRUE about this?

Net death benefit will be reduced if the loan is not repaid.

A whole life policy option where extended term insurance is selected is called a(n):

Nonforfeiture Option

A provision that allows a policyowner to withdraw a policy's cash value interest free is a(n):

Partial Surrender

Which type of rider will waive the premium on a child's life insurance policy if the parent paying the premium dies?

Payor Benefit

A rider that assures premiums will be paid on a juvenile policy until the child reaches a specific age is called a(n):

Payor Rider

Which situation accurately describes a reduced paid-up nonforfeiture option?

Policy has decreased face amount

In order to activate the reinstatement clause of a lapsed life insurance policy, the insured MUST:

Provide evidence of insurability to the insurer

What is NOT a characteristic of the Accelerated Death Benefit option?

The benefit can be offered as a rider at a specific extra cost or may be at no cost

This person is the insured on a life insurance policy where his age was misstated on the application. What is TRUE regarding the death benefit amount?

The death benefit paid will be what the premium would have if purchased at the correct age.

This person owns a 20-Pay Life policy with a paid-up dividend option. This means the policy('s)...

The policy may be paid up early by using policy dividends.

What will NOT increase the death benefit amount?

Waiver of Premium

If an insured dies during the grace period with no premiums paid...

the policy would be payable, minus the premium amount

Loans obtained by a policyowner against the cash value of a life insurance policy...

would NOT be treated as taxable income