Ch. 4 Life/Health

A partial withdrawal is considered ______________. A A partial surrender of the policy B A policy loan C A one-time event D A temporary event

A A partial surrender of the policy

Which of the following beneficiary designations prevents a policyowner from assigning the policy, taking a policy loan, or surrendering the policy without the beneficiaries consent? A Incontestable B Irrevocable C Class D Named

B Irrevocable

The provision that limits the amount of time an insurer has to challenge a claim and void the contract upon proof of a material misstatement is called the ____________ clause. A Entire Contract B Insuring C Consideration D Incontestability

D Incontestability

___________ in a policy allow the owner to name the beneficiary, choose a dividend option or settlement option, or borrow against the contract. A Incontestable Clause B Consideration Clause C Ownership Provision D Insuring Clause

C Ownership Provision

John is the insured. His wife Mary is the primary beneficiary. Their three children are the contingent beneficiaries. John and Mary are killed in a common accident. The proceeds of John's policy would be paid to: A John's estate B Mary's estate C The children D John's parents

C The children

Generally, an insurer may defer the granting of a policy loan for up to ______ months. A 12 B 3 C 9 D 6

D 6

The factors that determine the amount of each payment under the fixed period settlement option are: A Length of the fixed period, face amount of the policy, interest, and age of the beneficiary B Age of the beneficiary only C Length of the fixed period, face amount of the policy and interest D Length of the fixed period payout only

C Length of the fixed period, face amount of the policy and interest

Z is the beneficiary of a life insurance policy. Rather than take a lump sum, Z wanted a lifetime payout. However, Z would feel bad if after he died, residual values were retained by the insurer rather than being paid out. Z should consider which of the following settlement options? A Joint Life B Life with Period Certain C Life Refund D Life Only

C Life Refund

If an insured commits suicide within the time specified by the suicide clause, the insurance company may do all of the following, except: A Refuse to pay any death benefit B Void the policy C Refund to the beneficiary only the amount of premium paid to date D Refund to the beneficiary the amount of premiums and interest paid to date

D Refund to the beneficiary the amount of premiums and interest paid to date

All of the following are life insurance policy prohibited provisions, except: A Limiting the time to bring legal action against an insurer to less than 1 year B Backdating a policy more than 6 months to save age in order to lower the policy premium C Settlements for less than the face amount plus dividends minus the sum of outstanding policy loans, loan interest, and unpaid premium D Voiding a policy for failing to repay any policy loan or loan interest when the total outstanding policy debt is greater than the policy's cash value

D Voiding a policy for failing to repay any policy loan or loan interest when the total outstanding policy debt is greater than the policy's cash value

___________ in a policy allow the owner to name the beneficiary, choose a dividend option or settlement option, or borrow against the contract. A Ownership Provision B Incontestable Clause C Insuring Clause D Consideration Clause

A Ownership Provision

Tom elects the Life Income with 10-year Period Certain settlement option. Tom dies in year 6. The beneficiary receives payments for _______. A Life B 4 years C 10 years D 6 years

B 4 years

Each of the following is a source of life insurance policy dividends, except: A Reductions in operating expenses B Additional interest earnings C Guaranteed cash value accumulations D Savings in mortality

C Guaranteed cash value accumulations

If the premiums are not paid on a Traditional Whole Life policy that has been in force for decades with no loan outstanding, what happens? A Unless specified otherwise, the cash values buy extended term B The insurer mails a check to the policyowner in the amount of the policy's cash value C The policy lapses and is of no value to the policyowner D The policy becomes a reduced paid-up policy

A Unless specified otherwise, the cash values buy extended term

The name of the beneficiary designation that will pay a deceased beneficiary's share to the heirs of that beneficiary who predeceases the insured is called: A Per class B Per stirpes C Per individual D Per capita

B Per stirpes

All of the following can determine the death benefit settlement option, except: A The insurer B The beneficiary if the policyowner directs the insurer to permit him or her to choose C The beneficiary if no option was designated D The policyowner prior to death

A The insurer

Most often, life policies pay death claims in a single lump sum. The options that allow benefits to be paid other than lump sum are called _____________. A Distribution Options B Settlement Options C Mandatory Options D Statutory Options

B Settlement Options

Which of the following two documents always constitutes part of the entire contract? A Policy illustration and Agent's Report B The application and policy C Application and Agent's Report D Policy and Attending Physician's Statement

B The application and policy

The entire contract typically consists of all of the following, except: A Any riders B A copy of the application C The policy itself D A copy of the cancelled check and receipt

D A copy of the cancelled check and receipt

George has named each of his three sons as per capita primary beneficiaries of a $30,000 life insurance policy. If all three sons are living at the time of George's death, which statement best describes the amount each will receive? A The proceeds go into George's estate B The proceeds are paid directly to the three sons children only, in equal installments C The proceeds are to be shared equally among all three sons and their children D Each son receives $10,000

D Each son receives $10,000

Dividends if declared are paid __________. A Annually B Quarterly C Monthly D Semi-annually

A Annually

An insured allows a permanent policy to lapse. Unless otherwise instructed, the insurance company: A Will automatically institute the extended term option B Applies the remaining cash values into a deferred annuity C May apply the cash values to purchase additional paid up insurance D May exercise any nonforfeiture option it deems appropriate

A Will automatically institute the extended term option

A settlement option that guarantees a payment for a specified period of time and that liquidates both principle and interest is which of the following? A Fixed amount B Interest only C Fixed Period D Life income fixed period

C Fixed Period

The interest earned on dividends is: A Tax-deductible B Tax-deferred C Taxable D Nontaxable

C Taxable

What is the easiest and best way to assure that the life insurance policy's death proceeds don't end up in probate court process? A List a primary and contingent beneficiary by their full name and relationship to the insured B Make sure the client has a will that is current and in an easily accessible location C Ascertain that the client has a trust that is filed with the County court D Name the estate as beneficiary

A List a primary and contingent beneficiary by their full name and relationship to the insured

Which of the following correctly describes the effect of the Common Disaster Clause? A If an insured and contingent beneficiary both die in a train wreck, it is presumed that the insured died first in order to protect the primary beneficiary's right to claim the death benefit B If an insured and primary beneficiary both are killed when the bus they are riding in goes over a cliff and if it cannot be determined who died first, the insured or primary beneficiary, the insured will be presumed to have survived the primary beneficiary so the contingent beneficiary will be able to receive the death proceeds C If the primary and contingent beneficiary die when the boat they were sailing in sinks, it is presumed that the primary beneficiary outlived the contingent beneficiary for claims paying purposes D If the insured and primary beneficiary are killed in an auto accident in which both were in the car at the time of the crash, an autopsy will be required in order to determine which passenger died first

B If an insured and primary beneficiary both are killed when the bus they are riding in goes over a cliff and if it cannot be determined who died first, the insured or primary beneficiary, the insured will be presumed to have survived the primary beneficiary so the contingent beneficiary will be able to receive the death proceeds

As a general rule, most insurance companies will allow the insured to change to another type of insurance policy without a medical examination if the: A New premium is lower than the original B New premium is higher than the original C Changed within the incontestability period D Original policy had a COLA rider attached

B New premium is higher than the original

What provision establishes that if both the insured and the primary beneficiary die in the same accident, and it cannot be determined who died first, the insured will be presumed to have survived the beneficiary and proceeds will be paid to a named contingent beneficiary of the insured, or to the insured's estate? A Insuring Clause B Consideration Clause C Common Disaster Clause D Spendthrift Clause

C Common Disaster Clause

Fred purchased a $100,000 policy naming his wife, Wilma, as primary beneficiary, and his only child, Pebbles, to receive any proceeds if Wilma dies before Fred, or if she dies after Fred but before receiving all the policy proceeds. Fred elected the interest settlement option for Wilma, with the right of withdrawal after five years. No settlement option was stipulated for Pebbles. Fred dies on May 6th, 1991. Soon after purchasing her new car, Wilma is involved in a fatal car accident. The remaining proceeds of the insurance policy will be paid to: A Pebbles' trust fund B Wilma's beneficiaries C Pebbles, in any manner she chooses D Wilma's trust fund

C Pebbles, in any manner she chooses

If an insured commits suicide within the time specified by the suicide clause, the insurance company may do all of the following, except: A Refuse to pay any death benefit B Void the policy C Refund to the beneficiary the amount of premiums and interest paid to date D Refund to the beneficiary only the amount of premium paid to date

C Refund to the beneficiary the amount of premiums and interest paid to date