Policy Provisions, Options and Riders

Joanne has a 100,000 whole life policy with an accumulated 25,000 of cash value. She would like to borrow 15,000 against the cash value. Which of the following statements is true?

Net death benefit will be reduced if the loan is not repaid

Which of these is considered to be a living benefit option in a life insurance policy

accelerated death benefit

All of these are valid policy dividend options for a life insurance policyowner EXCEPT

accumulate without interest

Matt is applying for life insurance and requests a double indemnity rider. A double indemnity benefit will be payable to Matt's beneficiary if Matt

dies instantly from a car accident

The suicide clause of a life insurance policy states that if an insured commits suicide within a stated period from the policy's inception, the insurer will only be liable for a return of premiums paid

minus indebtedness and without interest

A whole life policy option where extended term insurance is selected is called a

nonforfeiture option

The automatic premium loan provision authorizes an insurer to withdraw from a policy's cash value the amount of

past due premiums that have not been paid by the end of the grace period

In order to activate the reinstatement clause of a lapsed life insurance policy, the insured MUST

provide evidence of insurability to the insurer

In order to activate the reinstatement clause of a lapsed life insurance policy, the insured MUST remit all past-due premiums within the grace period provide evidence of insurability to the insurer resubmit a new life insurance application provide a valid reason for the lapse

provide evidence of insurability to the insurer

All of the following are considered to be nonforfeiture options available to a policyowner EXCEPT

reduction of premium

A life insurance policyowner does NOT have the right to....

revoke an absolute assignment

An insured individual and the policy's beneficiary die from the same accident. The common disaster provision states the insurer will continue as if

the insured outlived the beneficiary

Pat owns a 20-pay life policy with a paid-up dividend option. Which of the following statements is true?

the policy may be paid up early by using policy dividends

The free-look provision gives the policyowner

the right to return the policy for a full refund within a specified number of days

Loans obtained by a policyowner against the cash value of a life insurance policy are treated as taxable income would not be treated as taxable income are limited by the face amount of the policy would be subject to a Federal estate tax

would not be treated as taxable income

Which dividend option would an insurer invest the policyowner's money and add any interest earnings as the dividends accrue?

Accumulation at Interest Option

Of the following dividend options, which of these is taxable?

Accumulation at interest

In what part of an insurance policy are policy benefits found?

Declarations

All of these are standard exclusions found in a life insurance policy EXCEPT

Disability

What is the name of the provision which states that a copy of the application must be attached to the policy when issued?

Entire Contract

Which of these would limit a company's liability to provide insurance coverage?

Exclusive

Which of the following is a reinstatement condition?

Proof of insurability

A life insurance policy normally contains a provision that restricts coverage in the event of death under all of the following situations EXCEPT

Fare-paying passenger

An insurer will accept a premium from the insured and continue the coverage in full force as though it was NOT late during which time period? Incontestable period Probation period Reinstatement period Grace period

Grace Period

Standard exclusions found in a life insurance policy

Hazardous occupations, aviation, and war

Which of the following protects a policyowner from a misrepresentation caused by an innocent mistake...

Incontestable clause

What is the purpose for having an accelerated death benefit on a life insurance policy?

It allows for cash advances to be paid against the death benefit if the insured becomes terminally ill

A provision that allows a policyowner to withdraw a policy's cash value at interest free is an

Partial Surrender

What is an insurer required to do when faced with an error made under the Misstatement of Age provision?

Pay age-corrected benefits

Which situation accurately describes a reduced paid-up nonforfeiture option?

Policy has a decreased face amount

Kurt is an active duty serviceman who was recently killed in an accident while home on leave. Which military service exclusion clause would pay upon his death?

Results

Which of these is NOT a characteristic of the Accelerated Death Benefit option?

The benefit can be offered as a rider at a specific extra cost may be at no cost

James is the insured on a life insurance policy where his age was misstated on the application. Which of the following is CORRECT regarding the death benefit amount? The original face amount will be paid to the beneficiary The policy will be voided with no death benefits paid The death benefit paid will be what the premium would have purchased at the correct age The amount of premiums paid will be returned with interest

The death benefit paid will be what the premium would have purchased at the correct age

Characteristics of Accelerated Death Benefit...

The face amount and policy premium are not affected by the payment There may be a dollar limit on the maximum benefit Before payment of the benefit is made, specific conditions must exist, such as suffering from a terminal illness.

Under a life insurance policy, what does the insuring clause state?

The insurers obligation to pay a death benefit upon an approved death claim

If an insured dies during the grace period with no premiums paid the policy would be payable, minus the premium amount the policy would be payable only after the beneficiary makes past due premium payment all past premiums will be refunded with interest the claim would be denied

The policy would be payable, minus the premium amount

All of the following riders can increase the death benefit amount EXCEPT

Waiver of premium

Ownership of a life insurance policy may be temporarily transferred with a

collateral assignment

Life insurance policies will normally pay for losses arising from...

commercial aviation

A waiver of premium rider allows an insured to waive premium payments if the insured is

completely and permanently disabled