Life Insurance: Provision, Options, and Riders Quiz
And insured had a $10,000 term life policy. The annual premium of $200 was due on February 1; however, the insured failed to pay the premium. He died on February 28. How much would the beneficiary receive from the policy?
$9800
Which of the following is true about a class designation?
Beneficiaries are not identified by name
An insured receives an annual life insurance dividend check. What term? Best describes this arrangement?
Cash option
Which nonforfeiture option has the highest amount of insurance protection?
Extended term
Which of the following is true regarding the spendthrift clause and life insurance policies?
It can protect the policy proceeds from creditors of the beneficiary
An insurer that does not pay a death benefit in a timely manner as required by state law, will be required to
Pay to the beneficiary an interest penalty from the date of the insured's death
What is true about a spouse term rider?
Spouse Term Rider
Upon the death of the insured, the primary beneficiary discovers that the insured chose the interest only settlement option. What does this mean?
The beneficiary will only receive payments of the interest earned on the death benefit
The pay up addition option uses the dividend?
To purchase a smaller amount of the same type of insurance as the original policy
Which is true about the cash surrender nonforfeiture option?
Funds exceeding the premium paid our tax was ordinary income
The automatic premium loan provision is activated at the end of?
Grace period
What is the waiting period on a waiver of premium rider life insurance policies?
6 months
An insured owns $50,0000 whole life policy, At age 46, the insured decided to cancel his policy and exercise the extended term option for the policy's cash value, which is currently $20,000. What would be the face amount of the new term policy?
$50,000
A writer attached to a life insurance policy that provides coverage on the insurance family members is called the?
Other- insured rider
When a reduced paid up nonforfeiture option is chosen, what happens to the face amount of the policy?
It is reduced to the amount of what the cash value would buy as a single premium
Which of the following allows the insured to relieve a minor insured from premium payments if the minors parents have died or become disabled?
Payer benefit
If an insured withdraws a portion of the face amount in the form of accelerated benefits, because of a terminal illness, how old are effective payable death benefit from policy?
The death benefit will be smaller
An insured stops making payments on a loan taken from his cash value policy. What will most likely happen?
The policy will terminate when the loan amount with interest equals or exceeds the cash value
Under an extended term nonforfeiture option, the policy cash value is converted to?
The same face amount as in the whole life policy
Under an extended term, nonforfeiture option, the policy cash value is converted to
The same face amount, as in the whole life policy
All of the following are true, regarding the guaranteed insurability rider, except?
The writer is available to all insurance with no additional premium
Policyowner can specify the way proceeds are split in the policy
The owner of a life insurance policy wishes to name the two beneficiaries for the policy proceeds. What will the soliciting insurance producer say?
Under which nonforfeiture option, does the company pay the surrender value and have no further obligations to the policy owner?
Cash surrender
An insured and his wife both are involved In a head- on- collision. The husband dies instantly, and the wide dies 15 days later. The company pays the death benefit to the estate of the insured. This indicates that the life insurance policy had what provision?
Common Disaster
Which nonforfeiture option provides coverage for the longest period of time?
Reduced paid- up
A father owns a life insurance policy on is 15 - year - old daughter. The policy contains optional payer benefit rider. If the father becomes disabled, what will happen to the insurance premiums?
The insurance premiums will be waived until she is 21
Which of the following premium payment mode split incurred the lowest overall payment?
Annual
A policyowner fails to pay the premium on his whole life policy after the grace period passes, but the policy remains in force. This is due to what provision?
Automatic premium loan
A policy owner fails to pay the premium due on his whole life policy after the grace period passes, but the policy remains in force. This is due to what provision?
Automatic, premium loan
Which of the following best describes fix - period. Settlement option?
Both the principal and interest will be liquidated over selected period of time
Under which nonforfeiture options does the company pay the surrender value and have no further obligations to the policyowner?
Cash Surrender
A long stretch of national economic hardship causes 7% rate of inflation. A policyowner notices that the face value of her life insurance policy has been raised 7% as a result. Which policy rider caused this charge?
Cost of living
A rider may be attached to a life insurance policy that will adjust the face amount based upon a specific index, such as the Consumer Price Index, is called.
Cost of living rider
Which is TRUE about the cash surrender nonforfeiture option?
Funds exceeding the premium paid are taxable as ordinary income
Which of the following statements is true concerning the accidental death rider?
It will pay double or triple a face amount
Which of the following statements is true concerning the accidental death rider?
It will pay double or triple the face amount
A father owns a life insurance policy on his 15 - year - old daughter. The policy contains the optional payer benefit rider. If the father becomes disabled, what will happen to the life insurance premiums?
The insurance premiums will be waived until she is 21
When a life insurance policy was issued, the policyowner designated a primary contingent beneficiary. Several years later, both the insured and the primary beneficiary dies in the same car accident, and it was impossible to figure out who died first. Which of the following would receive the death benefit?
The insured's contingent beneficiary
All of the following are TRUE statements regarding the accumulation at interest option EXCEPT
The interest rate is not taxable since it remains inside the insurance policy
What is the purpose of establishing the target premium for universal life policy?
To keep the policy in force
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?
Universal Life
When the policy owner specifies, a dollar amount in which installments are to be paid, he/she has chosen, which settlement option?
Amount
When the policy owner specifies, a dollar amount in which histamines are to be paid, he/she has chosen, which settlement option?
Fixed amount
If a life policy allows the policy owner to make periodic additions to the face amount at standard rates, without proving insurability, the policy includes a
Guaranteed insurability rider
Which of the following is true regarding the spendthrift clause in life insurance policies?
It can protect the policy proceeds from creditors of the beneficiary
Which option is being utilized when the insurer accumulates dividends at interest and then uses the accumulated dividends, plus interest, and the policy cash value to pay the policy up early?
Paid-up options
An insured purchased a life policy in 2010 and died in 2020. The insurance company discovers at that time the insured had misstated information about her history on the application. What will the insurer do?
Pay the death benefit
Which of the following riders would NOT cause the Death Benefit to increase?
Payor Benefit Rider
An insured pays $1200 annually for her life insurance premium. The insured applies this year's $300 worth of accumulated dividends to the next year's premium, thus reducing it to $900. What option does this describe?
Reduction of premium
An insured will be allowed to reactivate her lapsed life insurance policy if action if action is taken within a certain period of time, and proof of insurability is provided. Which policy provision allows this?
Reinstatement provision
An insured has a life insurance policy that he purchased three years ago when he was 40 years old. He is killed in an automobile accident, and has discovered that he is actually 45 years old and not 43, as stated on the application, what will the company do?
Pay a reduced death benefit
An insured has had a life insurance policy that he purchased 3 years ago when he was 40 years old. He is killed in an automobile accident, and it is discovered that he is actually 45 years old, and not 43, as stated on the application. What will the company do?
Pay a reduced death benefit
An insured stopped making payments on a loan taken from his cash value policy. What will most likely happen?
Policy will terminate when the loan amount with interest equals, or exceeds the cash value
Which of the following premium payment modes will incur the lowest overall payment?
Annual
And insured receives an annual life insurance dividend check. What term best describes this arrangement?
Cash option
During partial withdrawal from a universal life policy, which portion will be taxed?
Interest
A couple owns a life insurance policy with Children's Term rider. Their daughter is reaching the maximum age of dependent coverage, so she will have to convert to permanent insurance in the near future. Which of the following will she need to provide the proof of insurability?
Proof of insurability is not required
Which is true about a spouse term rider?
The rider is usually level term insurance
What is the term for how frequently a policy owner is required to pay the policy premium?
Mode
After a back injury, an insured is disabled for a year. His insurance policy carries a Disability Income Benefit rider. Which of the following benefits will he receive?
Monthly premium wavier and monthly income
What is the clause that describes the method of paying the death benefit in the event that the insured and beneficiary are both killed in the same accident?
Common disaster clause
The interest earned on a policy dividend is
Taxable
An individual has just borrowed $10,000 from his bank on a 5-year-installment loan requiring monthly payments. What type of life insurance policy would be best suited to this situation?
Decreasing term
When the policyowner specifies a dollar amount in which installments are to be paid, he/ she has chosen which settlement option?
Fixed Amount
What required provision against unintentional lapse of the policy?
Grace period
At the time of the insured purchased her life insurance policy, she had a writer that will allow her to purchase additional insurance in the future without having to prove insurability. This rider is called.
Guaranteed insurability
At the time the insured purchased her life insurance policy, she added a rider that will allow her to purchase additional insurance in the future without having to prove insurability. This rider is called
Guaranteed insurability
An insured has a life insurance policy 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?
Paid- up additions
An insured has a continuous premium whole life policy. She would like to use the policy dividends to pay off her policies sooner than would have been possible otherwise. What dividend option could she use?
Paid-up option
And insured that does not pay death benefit in a timely manner as a required state law, will be required to
Pay to the beneficiary and interest penalty from the date of the insured's death
Which of the following allows the insurer to relieve a minor insured from premium payments if the minor's parents have died or become disabled?
Payor Benefit
If an insured continually uses the automatic premium loan option to pay the policy premium
Policy will terminate when the cash value is reduced to nothing
Which nonforfeiture option provides coverage for the longest period of time?
Reduced paid-up
The interest earned on policy dividends is
Taxable
Hey, father holds out a life insurance policy and is 15 - year - old daughter. The policy contains the optional payer benefit rider. If the father becomes disabled, what will happen to the life insurance premiums?
The insurance premiums will be waived until she is 21
All of the following are true statements regarding the accumulation of interest option, except
The interest is not taxable since it remains inside the insurance policy
Which of the following statements is true concerning irrevocable beneficiary's?
They can be changed only with the written consent of that beneficiary
As an insured owns a life insurance policy. To be able to pay some of her medical bills, she withdraws a portion of the policies cash value. There's a limit for withdrawal, and the insured charges a fee. What type of policy does the insured likely have?
Universal life
Which of the following protects the insured from an unintentional policy lapse due to nonpayment of premium?
Automatic premium loan
The provision which states that both the policy and a copy of the application form the contract between the policy owner, and the insurer is called the
Entire contract
An individual is purchasing a permanent life insurance policy with a face value of $25,000. Wow, this is all the insurance that he can afford at this time, he wants to be sure that additional coverage will be available in the future. Which of the following options should be included in the policy?
Guaranteed insurability option
Which of the following is true about the premium on the children's rider in a life insurance policy?
It remains the same no matter how many children are added to the policy
Which of the following statements about the reinstatement provision is true?
It requires the policy owner to pay all overdue premiums with interest before the policy is reinstated
Which of the following statements is TRUE about a policy assignment?
It transfers rights of ownership from the owner to another person
Which of the following statements is true about a policy assignment?
It transfers, right of ownership from the owner to another person
And insured stops making payments on a loan taken from his cash value policy. What will most likely happen?
The policy will terminate when the loan amount will interest equals, or exceeds the cash value:
The waiver of cost of insurance rider is found in what type of insurance?
Universal life
The rider in a whole life policy that allows the company to forgo collecting the premium if the insured is disabled is called
Waiver of premium
An insured will be allowed to reactivate her lapsed life insurance policy if action is taken within a certain period of time, and proof of insurability is provided. Which policy provision allows this?
Reinstatement provision
Which of the following best describes fixed - period Settlement option?
Both the principal and interest will be liquidated over a selected period of time
Which of the following is true of a children's writer added to an insured's permanent life insurance policy?
It is term coverage that is convertible to permanent insurance at or prior to the children reaching the maximum coverage age
The insured under a $1000,000 life insurance policy with a triple indemnity rider for accidental death was killed in a car accident. It was determined that the accident was his fault. The triple indemnity in the rider in the policy specifies that the death must not be contributed to by the insured in any manner. In this case, What will the policy beneficiary receive?
$100,000
When the policyowner specifies a dollar amount in which installments are to be paid, he/she has chosen which settlement option?
Fixed amount
A rider attached to a life insurance policy that provides coverage on the insurance family member is called the
Other - insured rider
A rider may be attached to a life insurance policy that will adjust the face amount based upon specific index, such as the Consumer Price Index, is called?
Cost of living rider
