EXCEL Life Policies, Provisions, Premiums, Underwriting
P purchases a $50,000 whole life insurance policy in 2005. One of the questions on the application asks if P engages in scuba diving, to which P answers "No". The policy is then issued with no scuba exclusions. In 2010, P takes up scuba diving and dies in a scuba-related accident in 2011. What will the insurer pay to P's beneficiary?
$50,000 minus any outstanding policy loans
Additional coverage can be added to a Whole Life policy by adding a(n)
Decreasing term rider
Issued by the insurer
Dividends paid from a life insurance policy are...
D owns a Whole Life policy that was purchased 10 years ago. If the premium payments suddenly stop and D takes no additional action, which Nonforfeiture Option will the insurer likely proceed with?
Extended term. This is often the DEFAULT nonforfeiture option in the event on non-payment of premiums.
Payor Clause
Guarantees premiums waived if a juvenile life policyowner becomes disabled
True statements concerning Settlement Option
Increased proceeds can be provided through accumulation of interest, rapid depletion of proceeds can be avoided, proceeds can be administered by the insurance company
Insuring Clause
Insurer's basic promise to pay
Decreasing Term
May not have the automatic premium loan provision attached to it
Automatic Policy Loan
S has a Whole Life policy with a premium payment due soon. Which provision would keep the policy in force if S does not make the required payment and the policy has adequate cash value from which the premium payment can be made?
Beneficiaries Age. (what matters: type of life insurance, S's age, dividend amount used toward purchase)
S would like to use dividends from her life insurance policy to purchase paid-up additions. What factor does NOT determine how much coverage can be purchased
Straight
Straight
Decreasing
The combination of Whole Life and _____ Term insurance is referred to as a Family Income Policy
Decreasing Term
The conversion period varies according to the contract with ________ Life insurance
Term
The conversion period varies according to the contract with ________ Life insurance
Upon receipt of the policy by the policyowner
The free-look provision begins
Life income
Which settlement option pays a stated amount to an annuitant, but no residual value to a beneficiary?
Automatic Policy Loan
Will keep a whole life policy in force if a required premium payment is not made and there is sufficient cash value
0%
______ % of life insurance premiums is usually deductible for federal income tax purposes
Collateral Assignment
a life insurance policy may be used as collateral for a bank loan
Accumulate Interest Option
a policyowner may generate taxable income
What can be found in the entire contract clause or provision at the beginning of the policy
a statement that the application is considered part of the contract
Cost of Living Rider offers
additional death benefits
Extended Term Option offers the
highest death benefit (coverage is equal to death benefit)
Term Riders
may be used to include coverage for children under their parents' life insurance policy
Guaranteed Insurability Rider (future increase option)
permits the policyowner to buy additional permanent life insurance coverage at predetermined intervals without submitting proof of insurability
Grace
the purpose of the ______ period is to avoid an unintentional lapse of a life insurance policy
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. What statement made by the producer is correct?
20-Pay Life accumulates cash value faster than Straight Life
Waiver of Premium
A life insurance policy which ensures that the premium will be paid if the insured becomes disabled has what kind of rider attached
Reduced Premiums Option
A nonforfeiture option that continues to build-up cash value. This is a rear-end loaded provision and deducted when the policy is discontinued.
Consideration Clause
A policyowner must pay a premium in exchange for the insurer's promise to pay benefits.
Taxed as ordinary income
A statement about accumulated interest earned on dividends from an insurance company
With this rider, the policyholder can receive the benefits before death (living benefits)
Accelerated Benefits Rider
Decreasing Term Rider
Additional coverage can be added to a Whole Life policy by adding a(n):
Extended Term
Allows the policyowner to use the cash value to purchase a term insurance policy with a death benefit equal to that of the original whole-life policy
Long Term Care
An insured's inability to perform two or more activities of daily living.
6 months
An insurer may normally delay the payment of cash value loan or surrender value for up to
Extra premium
An underwriter determines that a life insurance applicant's risk should be reclassified due to a health issue. This policy may be issued with a(n)
S has a Whole Life policy with a premium payment due soon. Which provision would keep the policy in force if S does not make the required payment and the policy has adequate cash value from which the premium payment can be made?
Automatic Policy Loan
Additional Whole Life coverage at specified times
B owns a Whole Life policy with a guaranteed insurability option that allows him to purchase, without evidence of insurability, stated amounts of
Provides coverage for a child under a parent's life insurance policy
Child Term Rider
Extended Term
D owns a Whole Life policy that was purchased 10 years ago. If the premium payments suddenly stop and D takes no additional action, which Nonforfeiture Option will the insurer likely proceed with?
K's whole life insurance policy lapsed two months ago due to nonpayment. She would now like to reinstate the policy. What is incorrect about reinstating this policy
The policyholder will forfeit the right to use the automatic loan provision upon reinstatement
What is the advantage of reinstating an original life policy?
The premiums are based on a younger age
Policy Loan Provision
These loans, with interest, cannot exceed the guaranteed cash value
This type of life policy combines investment choices with a form of term coverage
Variable Universal Life
Values held in these separate accounts are invested in riskier, but potentially higher yielding assets than those in general accounts
Variable Whole Life Insurance
Inform insurer of relevant information not included on the application
What action should a producer take when submitting an insurance application to an insurer?
Automatically add the amount of interest due to the loan balance
What action will an insurer take if an interest payment on a policy loan is not made on time?
Insurer's basic promise
What does the insuring agreement in a Life insurance contract establish?
Life income (it is extended term, reduced paid-up, or cash surrender)
What is NOT an example of a Nonforfeiture option?
Reduced Paid-Up option
What is an example of a nonforfeiture option?
Variable Life
Which life insurance policy allows the policyowner to have level premiums and to also choose from a selection of investment options?
Decreasing Term Rider
adds an additional decreasing death benefit for a predetermined amount of time at a predetermined cost to the existing face value a permanent policy
Guaranteed Insurability Option
allows the insured to purchase specific amounts of additional insurance at specific times without proving evidence of insurability
Term Riders
an economical way to add a large amount of additional insurance to a permanent life insurance policy