Chapter 3 Chapter Exam

S buys a $50,000 whole life policy with a $50,000 accidental death and dismemberment rider. S dies 1 year later of natural causes. how much will the insurer pay the beneficiary?

$50,000

the consideration clause in a life insurance contract contains what pertinent information?

Amount of premium payments and when they are due

P died five years after purchasing a life policy. while investigating the claim, the insurer discovered material misrepresentations made by P during the application process. which of these actions will the insurer take?

Beneficiary will be paid the Death Benefit

when a policy owner exchanges a term policy for a whole life policy without providing proof of good health, which of these apply?

Conversion provision

which statement regarding the misstatement of age provision is considered to be true?

Coverage will be adjusted to reflect the insured's true age if a misstatement of age is discovered

P owns a $25,000 Life Policy that pays the face amount to him if he lives to age 70, or to his beneficiary if he dies before age 70. What kind of policy does P own?

Endowment at age 70

what provision in a life insurance policy states that the application is considered part of the contract?

Entire Contract provision

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

P is looking to purchase a life insurance policy that will pay a stated monthly income to his beneficiaries for 20 years after he dies and a lump sum of $20,000 at the end of that 20 year period. What type of policy should P purchase?

Family Maintenance Policy

Which of these needs is satisfied by Adjustable Life insurance?

Insured's need for flexible premiums

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

which of these are not an example of a nonforfeiture option?

Life Income

which of these would be considered a limited pay life policy?

Life Paid-Up at Age 70

when a life insurance policy exceeds certain IRS table values, the result would create which of the following?

Modified Endowment Contract (MEC)

all of these insurance products require an agent to have proper FINRA securities registration in order to sell them, except for

Modified Whole Life

K owns a whole life policy. If K wants an increasing death benefit to protect against inflation, which dividend option should she choose?

Paid-Up Additional Insurance

which of the following information is not required to be included in a whole life policy?

Policy's guaranteed dividend table

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

Reinstatement provision

S buys a $10,000 whole life policy in 2003 and pays an annual premium of $100. S dies 5 years later in 2008 and the insurer pays the beneficiary $10,500. what kind of rider did S include on the policy?

Return of premium rider

K is shopping for a permanent life insurance policy that will offer her the most protection per dollar of annual premium. which of these policies best fits her needs?

Straight life

Q is looking to buy a life insurance policy that will provide the greatest amount of protection for a temporary time period. which of these policies should Q purchase?

Term life

which of the following life insurance policies combine term insurance with an investment element?

Universal Life

a life policy with a death benefit and cash value that can fluctuate according to the performance of its underlying investment portfolio is referred to as

Variable Life

a(n) _____ ____ life policy combines investment choices with a form of term coverage

Variable Universal

which type of life policy contains a monthly mortality charge as well as self-directed investment choices?

Variable Universal Life

S has a whole life policy with a premium payment due soon. which provision would keep the policy in force is S does not make the required payment and the policy has adequate cash value from which the premium payment can be made?

automatic policy loan

a company that owns a life insurance policy on one of its key employees may do all of the following exccept

change the policy's interest rate

whose life is covered on a life insurance policy that contains a payor benefit clause?

child

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

child term rider

the combination of whole life and _____ term insurance is referred to as a family income policy

decreasing

a variable insurance policy

does not guarantee a return on its investment accounts

when an insurer issues a policy that refuses to cover certain risks, this is referred to as a(n)

exclusion

a universal life policy is sometimes referred to as an unbundled life policy because the owner can see the interest earned, cost of insurance and the

expense charges

the purpose of the _____ period clause is to avoid an unintentional lapse of a life insurance polciy

grace

all of these settlement options involve the systematic liquidation of the death proceeds in the event of

interest only

the automatic premium loan provision is designed to

keep the policy from lapsing.

which of the following is an example if a nonforfeiture option?

reduced paid up action

what kind of life insurance product covers children under their parent's policy?

term rider

which of the following is considered an element of a variable life policy?

underlying equity investment