Chapter 3: exam 2

T took out a $50,000 life insurance policy with an Accidental Death and Dismemberment rider. Five years later, T commits suicide. How much will the insurer pay?

50, 000 (The suicide occurred after the Suicide Provision which is typically 1-2 years)

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

An insurer's basic promise

S has a Whole Life policy with a premium payment due soon. Which provision would keep the policy in force if 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

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

Which of these statements about a guaranteed insurability option rider is not true?

Evidence of insurability is required when the option is exercised

Which of the following nonforfeiture options offers the highest death benefit?

Extended term

A long-term care rider in a life insurance policy pays a daily benefit in the event of which of the following?

Inability of the insured to perform more than 2 Activities of Daily Living (ADL's)

All of these Settlement options involve the systematic liquidation of the death proceeds in the event of the insured's death EXCEPT

Interest only

Which of these is not considered to be a right given to a policy owner?

Modify a provision in the insurance contract

P is the insured on a participating life policy. Which statement is true if P's premiums are waived due to a disability?

P will still receive declared dividends

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

Policyowner

What benefit does the payor clause on a juvenile life policy provide?

Premiums are waived if payor becomes disabled

D was actively serving in the Marines when he was killed in an automobile accident while on leave. His $100,000 Whole life policy contains a War Exclusion clause. How much will D's beneficiary's receive?

The full face amount

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

Variable Universal Life

A cost of living rider gives the insured

additional death benefits

Which of these actions is taken when a policyowner uses a Life Insurance policy as collateral for a bank loan?

collateral assignment

A nonforfeiture clause gives the policy owner

guaranteed values even if the policy has lapsed

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

M has an insurance policy that also has an outstanding policy loan at the time of M's death. The insurer will deduct the outstanding loan balance from the

policy proceeds

P purchases a $50,000 whole life insurance policy in 2005. One of the questions on the application ask if P engages in scuba diving, to which P answers "No". The policy is then issued with no scuba exclusions. In 2010, P takes up scuba diving and dies in a scuba-related accident in 2011. What will the insurer pay to P's beneficiary?

$50,000 minus any outstanding policy loans