STC Ch 2

Which of the following best describes a return of unused premiums to a policyowner from a whole life insurance contract?

A dividend

Which of the following does not provide a living benefit?

Accidental death rider

An increasing term rider is characterized by which of the following?

An increasing face amount

Jack borrowed money from a local bank. He also transferred to the bank the right to a portion of the death benefit from his life insurance policy if he dies before paying off the loan. This transfer is also known as:

Collateral assignment

A life insurance policy's incontestable clause allows an insurer:

Contest a claim occurring during the contestable period

A rider or amendment attached to a life insurance policy is part of the:

Entire contract

Which of the following provisions places limitations on an insurer's or producer's authority to waive a provision in an insurance contract?

Entire contract provision

Which of the following non-forfeiture options provides the greatest face amount of insurance protection?

Extended term insurance

The settlement option which pays principal and interest until proceeds are exhausted is called:

Fixed amount option

Which of the following settlement options is determined by the length of time proceeds are paid to a beneficiary?

Fixed period

A life insurance dividend is considered to be a return of an overpayment of premium. Therefore, life insurance dividends are tax-exempt. Each of the following is a dividend option, EXCEPT:

Interest only

Which of the following provides interest payments to the primary beneficiary following the death of the insured?

Interest only option

A whole life insurance policyholder possesses several dividend options as the owner of the contract. Which of the following is true regarding the one-year term dividend option?

It provides a level amount of protection for a temporary period

Several settlement options are available for the recipient of annuity proceeds. What is the principal difference between the life income and life income with period certain settlement options?

Life income payments end with the death of the recipient whereas life with period certain provides income to someone for the period certain

Dividend income received by a participating life insurance policyholder is:

Not taxable since it is a return of premium

A mutual insurer is defined as an insurance company that is owned by its policyholders. These types of insurers may pay dividends to policyholders since they issue which of the following types of policies?

Participating

An insured covered by a life insurance policy dies. Policy proceeds are payable to the beneficiary. The beneficiary is receiving $1,200 per month for an indefinite period of time. This is an example of which of the following?

Predetermined income amount settlement option

What provision appearing in a life insurance policy allows the insurer to charge an extra amount if the premium is paid on an other than annual basis?

Premium payment provision

Mutual insurers issue participating policies which in turn may pay dividends. Which of the following is a dividend option provided to the policyowner of a "par" policy?

Reduce the premium

All of the following are dividend options available in a participating life insurance policy, EXCEPT:

Reduced paid-up insurance

Which of the following policy options allows a policyowner to effectuate a single premium purchase?

Reduced paid-up insurance

If a death claim is submitted to an insurer while there is an outstanding loan against the whole life policy:

The amount of the loan plus any interest due will be deducted from the death benefit

Each of the following statements is true with regard to the modifications made to an existing life insurance policy, EXCEPT:

The change must be countersigned by the agent

Which of the following statements best describes the entire contract provision?

The entire contract provision states that the whole life contract consists of the policy, a copy of the original application and all other amendments, endorsements or riders

The waiver of premium rider, when added to a life insurance policy, would provide coverage in which of the following circumstances?

The insured suffers a total disability lasting eight months

Which of the following is true regarding an irrevocable beneficiary?

This beneficiary has the right to receive a copy of the policy

Nonforfeiture options provide a policyowner with each of the following choices, EXCEPT

Using the cash value to fund the automatic premium loan

Which of the following riders prevents a policy from lapsing if the insured becomes disabled?

Waiver of premium

The death benefit in a life insurance policy is also called the face amount. All of the following will reduce the face amount of this type of policy, EXCEPT:

Waiver of premium rider

With regard to an Accidental Death policy or rider, when may an insurer be prevented from having an autopsy done?

When State law prevents such action