Chapter exam 2- life provisions

Which of the following is not guaranteed in a whole life policy?

Dividend scale

Which of the following is not a condition that must be met for an accidental death benefit to be paid?

Answer- Cause of death must be from a job-related injury

Which statement regarding the life insurance premium for a children rider is true? A. Decreasing premium as each child becomes an adult B. Premium remains the same no matter how many children C. Increasing premium as additional children are born D. No premium is normally charged for a childrens rider

Answer- B. Premium remains the same no matter how many children

Q- Joe's a life insurance policy owner who has failed to pay interest on his policy loan. What will result in this non-payment? A. The insurer can charge a higher rate of interest. B. Loan amount is increased to reflect a mail of interest due. C. Future loan privileges will be suspended. D. The loan balance becomes due immediately

Answer- Loan amount is increased to reflect the amount of interest due. -when an interest payment is not made the policy loan amount is increased to reflect the amount of interest due.

Q- A life insurance policy owner would like a dividend option that results in a limited current outlay of funds. Which dividend option would be chosen? A. Paid up additions B. Accumulation at interest C. One year term D. Reduction of premium payment

Answer- Reduction of premium payment -The reduction of premium payment option allows a policy owner to use the dividend to pay all or part of the next premium due on the policy.

Q- Which life insurance policy would be eligible to include an automatic premium loan provision? A. Increasing term B. Level term c. Decreasing term D. Whole life

Answer- Whole life -an automatic premium loan provision is possible in whole life insurance because of the cash value that builds.

Which benefit is normally payable to a life insurance policy owner when the insureds life expectancy has been severely limited? A. Reduced paid up option B. Accelerated (living) benefit C. Return of premium benefit D. Extended term option

Answer- accelerated living benefit

What is the name of the rider that provides an additional purchase option in a life insurance policy? A. Payor rider B. Cost of living rider C. Waiver of premium rider D. Guaranteed instability rider

Answer- an additional purchase option in a life insurance policy is also known as a guaranteed instability rider

How may an insurance company classify an accidental death benefit on a life policy? A. As an optional policy rider B. As a provision of the policy C. As a nonforfeiture option D. As a mandatory policy rider

Answer- as an optional policy rider

Which statement regarding the waiver of premium rider is accurate? A. Policy loans are used to keep the policy active B. Cash payment is not directly provided to the policyowner C. Insurance companies are required to offer this to all policyowners D. Premiums are waived in the event of bankruptcy

Answer- cash payments is not directly provided to the policyowner

A source of supplemental income for a life insurance policyowner can be derived from the A. Cash value B. Payor benefit C. consideration D. Face amount

Answer- cash value

Q- In what way is a life insurance policy affected by an accelerated benefit payment? A. decreases the premiums B. Extends the grace period C. increases the policy loan balance D. Decreases the death benefit

Answer- decreases the death benefit

Which life insurance policy provision allows a policyowner to cancel the policy and receive a full refund within a limited time period after policy delivery? A. Grace period B. Incontestable period C. Elimination period D. Free look period

Answer- free look period

Which of these statements is not true regarding a cash value loan against a life insurance policy?

Answer- interest payments made by policyownwr are deductible

A policymaker has a life insurance policy where she had listed her age on the application as 5 years younger than her actual age. If she does and the insurer discovers the misstatement of age, how much will the insurance company pay? A. Nothing B. More than the face amount C. Less than the face amount D. Full face amount

Answer- less than the face amount

The automatic premium loan provision can be accurately described as a

Answer- provision that provides a policy loan to pay any premiums by the end of the grace period

Which life insurance clause prohibits an insurance company from questioning the validity of the contract after a stated period of time has passed? A. Entire contract provision B. Grace period provision C. Incontestable clause D. Insuring clause

Answer- the inconceivable clause prohibits the insurer from questioning the validity of the contract after a stated period of time has passed.

How is the insured protected if a payor benefit rider is attached to the life insurance policy? A. Premiums are waiver if the payor becomes financially insolvent B. Policy loan will automatically cover the premiums if payor becomes disabled or dies C. Premium payments are waived in the event the premium payor dies or becomes disabled D. Policy loan will automatically cover the premiums if payor becomes financially insolvent

Answer- the insured in a life insurance policy with a payor benefit rider is protected from the cost of premium payments if the premium payor dies or becomes disabled.

A life insurance policy that includes a return of premium rider will pay the beneficiary how much up on the insureds death? A. Total premiums paid plus the policy face amount B. Face amount plus interest accrued C.interest accrued plus total premiums paid D. Face amount minus an outstanding loan balances

Answer- total premium paid plus the policy face amount

Q- How is a collateral assignment used in a life in contact? A. Transfer is permanent ownership rights to a creditor B. Assigns complete ownership rights to a creditor. C. Transfer specific ownership rights to a creditor. D. Assigns ownership rights to the primary beneficiary

Answer- transfer specific ownership rights to a creditor. -A collateral assignment entitles a creditor to be reimbursed out of the policy proceeds of the amount owed.