Life Insurance Policy (chp.4)

What is the waiting period on a waiver of premium rider in life insurance policies? A 30 days B 3 months C 5 months D 6 months

D 6 months

Which of the following riders would NOT cause the death benefit to increase? a. cost of living rider b. accidental death rider c. payor benefit rider d. guaranteed insurability rider

c. payor benefit rider

If a settlement option is not chosen by the Policyowner or the beneficiary, which option will be issued? a. life income b. fixed period c. fixed amount d. lump sum

d. lump sum

Which of the following determines the length of time that benefits will be received under the fixed-amount settlement option? a. length of income period b. amount of interest c. size of each installment d. predetermined length of time stated in the contract

c. size of each installment

Which of the following statements about the reinstatement provision is true? a. it permits reinstatement within 10 years after a policy has lapsed b. it provides for reinstatement of a policy regardless of the insured's health c. it guarantees the reinstatement of a policy that has been surrendered for cash d. it requires the Policyowner to pay all overdue premiums with interest before the policy is reinstated

d. it requires the Policyowner to pay all overdue premiums with interest before the policy is reinstated

If a settlement option is not chosen by the policy owner or the beneficiary, which option will be used? A fixed period B fixed amount C lump sum D life income

C lump sum

Which of the following is NOT typically excluded from life policies? a. death due to plane crash for a fare-paying passenger b. self-inflicted death c. death that occurs while a person is committing a felony d. death due to war or military service

a. death due to plane crash for a fare-paying passenger

An individual applied for a life insurance policy on Jan. 10. The policy was issued on Jan. 31; however, because the insured's agent was on vacation at that time, the policy was not delivered until Feb.8. After reading through the policy provisions, the insured decided to return the policy to the insurer. When would the insured need to return the policy for a refund? a. by Feb. 10, or within 10 days of policy issue b. within 30 days of the application c. anytime, because the agent did not deliver the policy promptly d. by feb. 18, or within 10 days of the policy delivery

d. by feb. 18, or within 10 days of the policy delivery

An insured receives an annual life insurance dividend check. What term best describes this arrangement? a. reduction of premium d. annual dividend provision c. accumulation at interest d. cash option

d. cash option

Which of the following statements is TRUE about a policy assignment? a. it is the same as a beneficiary designation b. it permits the beneficiary to designate the person to receive the benefits c. it authorizes an agent to modify the policy d. it transfers rights of ownership from the owner to another person

d. it transfers rights of ownership from the owner to another person

A father purchases a life Iife insurance policy on his teenage daughter and adds the payor benefit rider. In which of the following scenarios will the rider waive the Payment of premium? A if the daughter is disable for any length of time B if the father is disable for more than 6 months C if the father is disabled for at least a year D if the daughter is disabled for more than 3 months

B if the father is disable for more than 6 months

Which of the following riders would NOT cause the death benefit to increase? A accidental death rider B payor benefit rider C guaranteed insurability rider D cost of living rider

B payor benefit rider

Which of the following is true about the premium on the children's rider in a life insurance policy? a. it remains the same no matter how many children are added to the policy b. it decreases when the oldest child reaches the age 21 c. it increases when a newborn baby is added to the policy d. it decreases when an adopted child is added to the policy

a. it remains the same no matter how many children are added to the policy

When a reduced-paid up nonforfeiture option is chosen, what happens to the face amount of the policy? a. it is reduced to the amount of what the cash value would buy as a single premium b. it is increased when extra premiums are paid c. it decreases over the term of the polic d. it remains the same as the original policy, regardless of any differences in value

a. it is reduced to the amount of what the cash value would buy as a single premium

The owner of a life insurance policy wishes to name two beneficiaries for the policy proceeds. What will the soliciting insurance producer say? a. the way proceeds are split between beneficiaries is decided by which type of policy is chosen b. life insurance policies may have only one beneficiary c. the proceeds will be split evenly between the two beneficiaries d. the Policyowner can specify the way proceeds are split in the policy

d. the Policyowner can specify the way proceeds are split in the policy

When the insured selects the extended term nonforfeiture option, the cash value will be used to purchase term insurance with what face amount? A the same as the original policy minus the cash value B equal to the original policy for as long as the cash values will purchase C in lesser amounts for the remaining policy term of age 100 D equal to the cash value surrendered from the policy

B equal to the original policy for as long as the cash values will purchase

What limited the amount that a policy owner may borrow from a whole life insurance policy? A amount stated in the policy B face amount C cash value D premiums paid

C cash value

An insured receives an annual life insurance dividen check. What term best describes this arrangement? A reduction of premium B annual dividend provision C accumulation at interest D cash option

D cash option

The sole beneficiary of a life insurance policy dies before the insured. If the policy owner fails to change the beneficiary before the death, the process of the policy will go to A the stare B the beneficiary's estate C the insureds estate D probate

C the insured estate

Which of the following allows the insurer to relieve a minor insured from premium payments if the minors are ra have died or become disable? A payor benefit B jumping juvenile C juvenile premium provision D waiver of premium

A payor benefit

What is the other term for the cash payment settlement option? A. Proceeds B. Lump sum C. Principal amount D. Face amount

B. Lump sum

According to the entire contract provision, a policy must contain A a declarations page with a summary of insureds B buyers guide to life insurance C listing of the insured former insurers for incontestibility provisions D a copy of the original app

D a copy of the original app

Under which nonforfeiture option does the company pay the surrender value and have no further obligations to the policy owner? A paid-up options B extended term C cash surrender D reduced paid up

D reduced paid up

A rider attached to a life policy that provides coverage on the insureds family members js called the A juvenile rider B payor rider C other insured rider D change of insured rider

C other insured rider

The accelerated benefits provision will provide for an early payment of the death benefit when the insured A becomes terminally ill B needs to borrow money C has earned enough credits D becomes disabled

A becomes terminally ill

All of the following are true statements regarding the accumulation at interest option except A the interest is credited at a rate specified by the policy B the policyholder has the right to withdraw the accumulations at any time C the interest is not taxable since it remains inside the insurance policy D the annual divided is retained by the company

C the interest is not taxable since it remains inside the insurance policy

Which of the following is true about the premium on the children's rider in a life insurance policy? A it decreases when the oldest child reaches age 21 B it increases when a newborn baby is added to the policy C it decreases when an adopted child is added to the policy D it remains the same no matter how many children are added to the policy

D it remains the same no matter how many children are added to the policy

Which is TRUE about the cash surrender nonforfeiture option? a. funds exceeding the premium paid are taxable as ordinary income b. after the cash surrender, the insured is covered for a grace period of one month c. the policy remains active for some time after the policyholder opts for cash surrender d. the policyholder receives the original cash value of the policy

a. funds exceeding the premium paid are taxable as ordinary income

When a life insurance policy stipulates the beneficiary will receive payments in specified installments or for a specified number of years, what provision prevents the beneficiary from changing or borrowing from the planned installments? a. spendthrift provision b. settlement option c. accelerated benefit provision d. loan provision

a. spendthrift provision

The paid-up addition option uses the dividend.. A. To accumulate additional savings for retirement B. To purchase a smaller amount of the same type of insurance as the original policy C. To purchase a one year term insurance in the amount of the cash values D. To reduce the next years premium

B. To purchase a smaller amount of the same type of insurance as the original policy

An insured stops making payments on a loan taken from his cash value policy. What will most likely happen? A the insurer will not permit the policy owner to take out anymore loans B the policy will be reduced to an extended term option C the policy will terminate when the loan amount with interest equals or exceeds to cash value D the insurer will increase the interest rate on the loan and charge a penalty

C the policy will terminate when the loan amount with interest equals or exceeds to cash value

An insured will be allowed to deactivate her lapsed life insurance policy if croon is taken within a certain period of time, and proof of insurability is provided which policy provision allows this? A incontestable clause B grave period C reinstatement provision D waiver of premium provision

C reinstatement provision

All of the following are true statements regarding the guaranteed insurability rider except A this rider is available to all insureds with no additional premiums B the insured may purchase additional coverage at the attained age C the insured may purchase additional insurance yo the amount specified in the base policy D it allows the insured to purchase additional amounts of insurance without proving insurability only at specified dates or events

A this rider is available to all insureds with no additional premiums

An insured and his wife are both involved in a head on collision. The husband dies instantly, and the wife dies 15 days later the company pays the beneficiary to the estate of the insured. This indicates that the life insurance policy had what provision? A common disaster B accidental death C survivor life D second to die

A common disaster

If an insured continually uses the automatic premium loan option to pay the policy premium, A the insurer will increase the premium amount B the policy will terminate when the cash value is reduced to nothing C the face amount of the policy will be reduced by the automatic premium loan amount D the cash value will continue to increase

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

What is the purpose of a fixed-period settlement option? A. To provide a guaranteed income for life B to provide a guaranteed amount of money each month C to provide a guaranteed income for a certain amount of time D to settle the insurance company's liability

C to provide a guaranteed income for a certain amount of time

Which is true about the cash surrender nonforfeiture option? A after the cash surrender, the insured is covered for a grave period of one month B the policy remains active for some time after the policyholder opts for cash surrender C the policyholder recices the original cash value of the policy D funds exceeding the premium paid are taxable as ordinary income

D funds exceeding the premium paid are taxable as ordinary income

What is the benefit of choosing extended term as a nonforfeiture option? A it matures at age 100 B it allows for coverage to continue beyond maturity date C it can be converted to a fixed annuity D it has the highest amount of insurance protection

D it has the highest amount of insurance protection

An insured owns a life insurance policy. to be able to pay some of her medical bills, she withdraws a portion of the policy's cash value. There is a limit for a withdrawal and the insurer charges a fee. What type of policy does the insured most likely have? a. universal life b. adjustable life c. term life d. limited pay

a. universal life

An insured has a life insurance policy from a participating company and receives quarterly dividends. He has instructed the company to apply the policy dividends to increase the death benefit. The dividend option that the insured has chosen is called a. reduction of premiums b. paid-up additions c. one-year term purchase d. accumulation at interest

b. paid-up additions