Chapter 3 PArt 2 Xcel Solutions Quiz

An insured's inability to perform two or more activities of daily living may trigger which type of policy rider?

Long Term Care

What Nonforfeiture options continue a build-up of cash value?

Reduced paid-up

S buys a $50,000 whole life policy with a $50,000 Accidental Death and Dismemberment rider. S dies 1 year later of natural causes. How much will the insurer pay the beneficiary?

$50,000

A potential client, age 40, would like to purchase a Whole Life policy that will accumulate cash value at a faster rate in the early years of the policy. Which of these statements made by the producer would be correct?

20-Pay Life accumulates cash value faster than Straight life

What action can a policyowner take if an application for a bank loan requires collateral?

Assign policy ownership to the bank.

Which action is taken when a policyowner uses a life insurance policy as collateral for a bank loan?

Collateral Assignment

How are surrender charges deducted in a life policy with a rear-end loaded provision?

Deducted when the policy is discontinued

N is a student pilot with a large life insurance policy. Which of these features would limit the insurer's obligation in the event N was killed while flying as a student pilot?

Exclusion. Exclusions are specified hazards listed in a policy for which benefits will be paid.

P is the insured on a participating life policy. Which statement is true if P's premiums are waived due to a disability?

P will still receive declared dividends. Even though premiums are waived because of the disability, the insured will continue to receive dividends, just as if the insured were still making the payments themselves.

K owns a Whole Life policy. If K wants an increasing Death Benefit to protect against inflation, which Dividend Option should she chose?

Paid-Up Additional Insurance

M had an annual life insurance premium payment due January 1. She died January 10 without making the premium payment. What action will the insurer take?

Pay face amount minus the past due premium. This is because the death occurred within the grace period.

Which provisions guarantees that premiums will be waived if a Juvenile Life policyowner becomes disabled?

Payor clause

The _________ is authorized to assign a Life insurance policy as collateral for a loan.

Policyowner

What benefit does the Payor clause on a Juvenile Life policy provide?

Premiums are waived if the payor becomes disabled

What can be said about accelerated death benefits?

They must have a terminal illness to qualify. These benefits can provide for the early payment of some portion of the policy face amount should the insured suffer from terminal illness or injury.

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

The free-look provision begins

Upon receipt of the policy by the policyowner

A Term life rider offers the insured

additional life coverage

The consideration clause in a life insurance policy indicates that a policyowner's consideration consists of a completed application and

the initial premium

P is blinded in an industrial accident. Which provision of his life insurance policy will pay a stated benefit amount?

Accidental Death and Dismemberment clause

A policyowner may generate taxable income from which of the following Dividend Options?

Accumulation of interest. any interest paid on them is taxable income in the year the interest is credited to the policy.

D was actively serving in the Marines when he was killed in an automobile accident while on leave. His $100,000 Whole life policy contains a War Exclusion clause. How much will D's beneficiary's receive?

The full face amount. (the full death benefit stated in the policy)

What rights are given to a policyowner?

The right to surrender the policy's cash value, assigning ownership, and the right to change the beneficiary, if revocable

A cost of living rider gives the insured

additional death benefits. The Cost of Living rider can be purchased with many different types of life insurance. This type of coverage is designed to help you hedge your bets against inflation. For example, if you purchase this rider, your policy is going to increase in value if inflation increases.

The automatic premium loan provision is designed to:

avoid a policy lapse

How do life insurance companies handle cases where the insured commits suicide within the contract's stated Contestable period?

claims are denied under the Suicide clause of the policy