Chapter Exam 2 - Life Provisions

A Term Life rider offers the insured

Additional life coverage

An insurer may normally delay the payment of a cash value loan to surrender value for up to

6 months

The incontestable clause allows an insurer to:

Contest a claim during the contestable period

What provision in a life insurance policy states that the application is considered part of the contract?

Entire Contract provision

Which of these statements about a Guaranteed Insurability Option rider is NOT TRUE?

Evidence of insurability is required when the option is exercised

How are policyowner dividends treated in regards to income tax?

Interest on accumulations is taxed

Which of these are NOT an example of a nonforfeiture option?

Life income

In a life insurance policy, which provision states who may select policy options, designate and name a beneficiary, and be the recipient of any financial benefits from the policy?

Owner's rights

All of the following statements are true regarding a policy's Grace Period, EXCEPT:

Past due premiums are waived

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

Pay face amount minus the past due premium

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

The initial premium

Which life insurance rider typically appears on a Juvenile life insurance policy?

payor benefit rider

M has an insurance policy that also has an outstanding policy loan at the time of M's death. The insurer will deduct the outstanding loan balance from the

policy proceeds

What is the suicide provision designed to do?

safeguard the insurer from an applicant who is contemplating suicide

K pays on a $20,000 20-Year Endowment policy for 10 years and dies from an automobile accident. How much will the insurance company pay the beneficiary?

$20,000 death benefit

A policyowner may generate taxable income from which of the following dividend options?

Accumulation at interest

P died five years after purchasing a life policy. Whole investigating the claim, the insurer discovered material misrepresentations made by P during the application process. Which of these actions will the insurer take?

Beneficiary will be paid the desth benefit

N is covered by a Term Life policy and does not make the required premium payment which was due Aug 1. N dies September 15. What action will the insurer take?

Claim will be denied

Which statement regarding the Misstatement of Age provision is considered to be true?

Coverage will be adjusted to reflect the insured's true age if a misstatement of age is discovered

When an insurer issues a policy that refuses to cover certain risks, that is referred to as a(n)

Exclusion