Chapter 2 Exam: Life Provisions

K pays on a $20,000 20-Year Endowment policy for 10 years and dies from an automobile accident. How much will the insurance company pay the beneficiary?

$20,000 death benefit

A potential client, age 40, would like to purchase a Whole Life policy that will accumulate cash value at a faster rate in the early years of the policy. Which of these statements made by the producer would be correct?

20-Pay Life accumulated cash value faster than Straight Life

B owns a Whole Life policy with a guaranteed insurability option that allows him to purchase, without evidence of insurability, stated amounts of:

Additional Whole Life coverage at specified times

What does the insuring agreement in a Life insurance contract establish?

An insurer's basic promise

The Automatic Premium Loan provision is designed to:

Avoid a policy lapse

Variable Whole Life Insurance can be described as:

Both an insurance and securities product

Which rider provides coverage for a child under a parent's life insurance policy?

Child term rider

How are the surrender charges deducted in a life policy with a rear-end loaded provision?

Deducted when the policy is discontinued

Which provision prevents an insurer from charging the terms of contract with the policy owner by referring to document snot found within the policy itself?

Entire Contract Provision

In a life insurance policy, which feature states that the policy will not cover certain risks?

Exclusion

D owns a Whole Life policy that was purchased 10 years ago. If the premium payments suddenly stop and D takes no additional action, which Nonforfeiture Option will the insurer likely proceed with?

Extended term

How are policy owner dividends treated in regards to income tax?

Interest on accumulations is taxed

The Accidental Death and Dismemberment (AD&D) provision in a life insurance policy would pay additional benefits if the insured:

Is blinded in an accident

Dividends paid from a life insurance policy are:

Issued by the insurer

K's whole life insurance policy lapsed two months ago due to nonpayment. She would now like to reinstate the policy. All of these statements are correct about the policy's reinstatement EXCEPT

K will forfeit the right to use the automatic loan provision upon reinstatement

An insured's inability to perform two or more activities of daily living may trigger which type of life policy rider?

Long term care

All of these statements concerning Settlement Options are true, EXCEPT:

Only the beneficiary may select

B recently died and was insured with a life insurance policy for over five years. During the claims process, the insurer discovered that B had understated his age by 5 years at the time of application. In this situation, the insurer will:

Pay the amount that the premium would have purchased at the correct age

Which life insurance rider typically appears on a Juvenile life insurance policy?

Payor Benefit rider

Which of the following provisions guarantees that premiums will be waived if a Juvenile Life policy owner becomes disabled?

Payor clause

The _____ is authorized to assign a Life Insurance policy as collateral for a loan.

Policy owner

Which of the following is an example of nonforfeiture option?

Reduced Paid-Up option

The provision that can be used to put an insurance policy back in force after it has lapsed due to nonpayment is called:

Reinstatement

J let her life insurance policy lapse 8 months ago due to nonpayment. She can reestablish coverage under which of the following provisions?

Reinstatement provision

What is the Suicide provision designed to do?

Safeguard the insurer from an applicant who is contemplating suicide

Which of these types of life insurance allows the policy owner to have level premiums and to also choose from a selection of investment options?

Variable Life

When a misrepresentation on a life insurance policy application is discovered, what action may an insurance company take>

Void the policy only if it is discovered during the Contestable period and proven to be material

A life insurance policy which ensures that the premium will be paid if the insured becomes disabled has what kind of rider attached?

Waiver of Premium

When is the face amount of a Whole Life policy paid?

When the insured dies or at the policy's maturity date, whichever happens first

A Return of Premium life insurance policy is:

Whole life and increasing term