Life Ins. Policy Provisions, Options and Riders (ch.4)

What happens when a policy is surrendered for its cash value?

Coverage ends and the policy cannot be reinstated.

Provision in policy extends coverage beyond premium due date

Grace period

Insured purchased life Ins policy on his life with his wife as a primary beneficiary and his daughter as a contingent beneficiary. Under what circumstances could the daughter collect the death benefit?

If the primary beneficiary predeceases then insured

True regarding Accumulation at interest

Interest is taxable

Name of a clause that is included in a policy that limits/eliminates the death benefit if the insured dies as a result of war while serving in military?

Military service or war

Dividend option where policyowner uses dividends to purchase a term policy for one year

One year term option

Insured has life Ins policy from participating company and receives quarterly dividends. He has instructed the company to apply policy dividends to increase death benefit. Dividend option that the insured has chosen is called

Paid-up additions

Which allows insurer to relieve a minor insured from premium payments if the minor's parents have died or become disabled?

Payor benefit

Nonforfeiture option provides coverage for the longes period of time?

Reduced paid-up

Insured is allowed to deactivate her lapsed life ins policy if action is taken within a certain period of time, and proof of insurability is provided. Which policy provision allows this?

Reinstatement provision

What about Nonforfeiture Values is true?

Required by state law to be included in the policy

Sole beneficiary of a life Ins policy dies before the insured. If the policyowner fails to change the beneficiary before the insured's death, the proceeds of the policy will go to

The insured's estate

If Insured continually uses the automatic premium loan option to pay policy premium,

The policy will terminate when the cash value is reduced to nothing

Owner of policy wants 2 beneficiaries for policy proceeds. What will the soliciting ins producer say?

The policyowner can specify the way proceeds are split in the policy

Insured owns a life policy. To be able to pay some medical bills, she withdraws a portion of the policy's cash value. There is a limit for a withdrawal & insurer charges a fee. What type of policy does she have?

Universal life

Kind of policy that allows withdrawals or partial surrenders

Universal life

Waiting period on a waiver of premium rider in life Ins policies

6 months

According to the entire contract provision, what document must be made part of the insurance policy?

Copy of the original application

What's the benefit of choosing extended term as a nonforfeiture option?

It has the highest amount of insurance protection

Rider attached to life Ins policy that provides coverage on insured's family members is called the

Other-insured rider

Primary Beneficiary predeceases the insured, in the event of insured's death, the death benefit proceeds will be paid to

The contingent beneficiary

Policyowner fails to pay first premium due on whole life policy after grace period passes but the policy is still in force. This is due to what provision?

Automatic premium loan

Rider may be attached to a life Ins policy that will adjust the face amount based upon specific index such as the consumer price index is called

Cost of living rider