Chapter 2 insurance

all of the following are examples of third party ownership of a life insurance policy EXCEPT

An insured borrows money from the bank and makes collateral assignment of a part of the death benefit to secure the loan

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

Lump sum

Which of the following riders would NOT cause the Death benefit to increase?

Payor benefit rider

all of the following are true regarding insurance policy EXCEPT

Policy loans can be made on policies that do not accumulate cash value

Which is true about a spouse term rider?

The rider is usually level term insurance

What is the purpose of a suicide provision within a life insurance policy?

To protect the insurer from persons who purchase life insurance with the intention of committing suicide

the accelerated benefits provision for an earl payment of the death benefit when the insured

becomes terminally ill

A rider that may be attached to a life insurance policy that will adjust the face amount based upon a specific index, such as the consumer price index is called

cost of living rider

what happens when a policy is surrendered for its cash value

coverage ends and the policy cannot be reinstated

when the insured selects the extended term nonforfeiture option, the cash value will be used to purchase term insurance with what face amount?

equal to the original policy as long as the cash values will purchase.

Life income joint and survivor settlement option guarantees

income for 2 or more recipients until they die

During partial withdrawal from a universal life policy, which portion will be taxed?

interest

The policy owner wants to make sure that upon his death, the life policy will pay a portion of the proceeds annually to his spouse, but that the principal will be paid to their children when they reach a certain age. which settlement option should they choose?

interest only option

which of the following statements is TRUE concerning the Accidental Death Rider

it will pay double or triple the face amount

The type of settlement option which pays throughout the lifetimes of two or more beneficiaries is called

joint and survivor

the dividends option in which the policyowner used dividends to purchase a term policy for one year is referred to as

one-year term option

Which of the following explains the policyowners right to change beneficiaries, choose options, and receive proceeds of a policy?

owner's rights

An insured purchased a life policy in 2010 and died in 2017. The insurance company discovers at that time that the insured had concealed information during the application process. What can they do?

pay the death benefit. they waited past 2 years.

The policyowner pays her life insurance annually. until now she has collected a nontaxable dividends check each year. she has decided that she would rather use the dividends to help pay for her next premium. what option would allow her to do this?

reduction of premium

the interest earned on policy dividends is

taxable

Nonforfeiture Values guarantee which of the following for the policyowner

the cash value will not be lost

all of the following are true statements regarding the accumulation at interest option EXCEPT

the interest is not taxable since it remains inside the insurance policy

An insured stops making payments on a loan taken from his cash value policy. What will most likely happen?

the policy will terminate when the loan amount with interest equals or exceeds cash value

what is the purpose of a fixed-period settlement option

to provide a guaranteed income for a certain amount of time

how long will the beneficiary receive payments under the single life settlement option

until death of beneficiary

the rider in a whole life policy that allows the company to forgo collecting the premium is the insured is disabled is called

waiver of premium