Life ins. Policy provisions, options and riders

Which is the only death which would not qualify for double indemnity?

Sal dies as a result of an auto accident 6 months after the crash. The Double Indemnity rider typically requires death to occur within a period of time following the accident, not exceeding 90 days

What are the rights of the insured in a third-party ownership situation?

The insured has no rights.

Delta, who has a $100,000 policy with double indemnity, commits suicide after 8 years. Her beneficiary will receive:

100,000. Although the policy is past the suicide contestability period, it will not double the benefit because it is self-inflicted

The guaranteed insurability rider is generally available under all of the following policies EXCEPT:

A guaranteed insurability rider allows the policyowner to buy ordinary whole life insurance, limited payment life insurance, or universal life insurance. Term insurance, however, is not normally available under this rider.

Jane has a life policy with a cost of living rider. How does the rider protect Jane against the effects of inflation?

As prices increase, so does the coverage amount. A cost of living (COL) rider is tied to an inflation index such as the Consumer Price Index (CPI). As the CPI increases, so does the policyowner's coverage. Proof of insurability is not required for the increased coverage.

Each of these could result in a double indemnity payout except:

Death from Alzheimer's 30 days after being struck as a pedestrian. The accident must be the sole cause of death

Nelson is covered by ABC Corporation's group disability plan. He has no other disability income protection and wants to continue the coverage after he terminates his employment with ABC Corporation. What is the most likely outcome?

He will not be able to continue or convert the policy. Most group disability plans are not portable. This means that when an insured leaves a job, his or her coverage under that employer's disability plan ends. In contrast, individual DI policies "follow" the insured from job to job.

Arnie, age 27, is married with two young children. He was just diagnosed with cancer and wants to increase his insurance coverage to protect his family should he die prematurely. Arnie can purchase additional insurance without having to provide evidence of insurability if his current life insurance policy contains which of the following riders?

The typical guaranteed insurability rider lets the policyowner buy more life insurance of a specified amount on policy anniversaries without having to provide proof of insurability.

You can exercise a Guaranteed Insurability Option for all but which of the following reasons?

You buy a new home

One difference between individual and group disability income policies is that

group DI policies are not portable, while individual policies are not affected by the insured leaving one employer for another.

A double indemnity is a rider most commonly found on what type of policy?

life insurance policy. An accidental death benefit rider provides an additional amount of insurance if the insured dies as a result of an accident. The additional amount is typically double or triple the amount of the base policy's face value.

Your client has a life insurance policy with an accidental death benefit rider. He is seriously injured in an automobile accident. After a month, he is released from the hospital to continue rehabilitation at home. During rehabilitation, he dies from pneumonia. What will the rider pay?

nothing. An accidental death benefit rider pays its additional benefit only if death occurs directly because of an accident. Death from illness or self-inflicted wounds would not qualify for the benefit.

A life insurance policy's rights provision defines the

rights of the policyholder. The purpose of a life insurance policy's rights provision is to establish the rights of the policyowner and the conditions under which those rights can be exercised.

John is a life insurance policyowner. Under the policy, his wife Mary is the insured. What is this situation known as?

third-party ownership. In cases where the insured and policyowner are different, a third-party ownership situation exists.

Your client's life insurance policy will pay a $10,000 benefit if he were to die in an accident. At the client's death, the policy instead pays a $30,000 benefit. Which type of rider did the policy include?

triple indemnity rider. A triple indemnity rider pays triple the basic benefit should the insured die in a specific manner. A double indemnity rider pays twice the amount.