Chapter 3 Exam - Life Provisions

Ron has a life insurance policy with a face value of $100,000 and a cost of living rider. If the consumer price index has gone up 4%, how much may Ron increase the face value of the policy?

$4,000

Which of the following is considered to be an alternative to a life settlement?

Accelerated death benefit rider

The double indemnity provision in a life insurance policy pertains to an insured's death caused by a(n)

Accident

All of these are valid policy dividend options for a life insurance policyowner EXCEPT A. Cash outlay to the policyowner B. Accumulate without interest C. Reduction in policy premium D. Buy additional insurance coverage

Accumulate without interest

Of the following dividend options, which of these is taxable?

Accumulation at interest

Which dividend option would an insurer invest the policyowner's money and add any interest earnings as the dividends accrue?

Accumulation at interest option

An error was made on Mary's life insurance application. Which of the following areas are errors commonly made on applications for which the incontestable clause does NOT apply? A. Marital status B. Age C. Address D. Income

Age

Which of the following is NOT part of an insurance contract? Policy Application Riders Certificate of Authority

Certificate of Authority

A provision that allows a policyowner to temporarily give up ownership rights to secure a loan is called a(n)

Collateral assignment

Life insurance policies will normally pay for losses arising from

Commercial aviation

In what part of an insurance contract are policy benefits found?

Declarations

Matt is applying for life insurance and requests a double indemnity rider. A double indemnity benefit will be payable to Matt's beneficiary if Matt

Dies instantly from a car accident

A life insurance policyowner was injured in an automobile accident which results in a total and permanent disability. Which rider would pay a monthly amount because of this disability?

Disability income rider

A life insurance policy normally contains a provision that restricts coverage in the event of death under all of the following situations EXCEPT A. Fare-paying passenger B. Pilot of personal airplane C. Suicide D. War

Fare-paying passenger

An insurer will accept a premium from the insured and continue the coverage in full force as though it was NOT late during which time period?

Grace period

Barbara's policy includes a rider which allows her to purchase additional insurance at specific dates or events without evidence of insurability. This rider is called a(n)

Guaranteed insurability rider

Which of these is NOT considered to be a nonforfeiture option in a whole life insurance policy? A. Interest only B. Reduced paid-up insurance C. Extended term insurance D. Cash surrender

Interest only

Which of these is NOT considered to be a common life insurance nonforfeiture option? Cash surrender Extended term insurance Reduced paid-up Insurance Life income annuity

Life income annuity

The suicide clause of a life insurance policy states that if an insured commits suicide within a stated period from the policy's inception, the insurer will only be liable for a return of premiums paid

Minus indebtedness and without interest

A whole life policy option where extended term insurance is selected is called a(n)

Nonforfeiture option

A provision in a whole life policy allows a policyowner to terminate a policy in return for a reduced paid-up policy of the same type is called a(n)

Nonforfeiture provision

A provision that allows a policyowner to withdraw a policy's cash value interest free is a(n)

Partial surrender

The automatic loan provision authorizes an insurer to withdraw from a policy's cash value amount to

Past due premiums that have not been paid by the end of the grace period

What is an insurer required to do when faced with an error made under the Misstatement of Age provision?

Pay age-corrected benefits

Which type of rider will waive the premium on a child's life insurance policy if the parent paying the premium dies?

Payor benefit

A rider that assures premiums will be paid on a juvenile policy until the child reaches a specific age is called a(n)

Payor rider

What is an insurance policy's grace period?

Period of time after the premium is due but the policy remains in force

Which situation accurately describes a reduced paid-up nonforfeiture option?

Policy has a decreased face amount

Which of the following is a reinstatement condition? A. Proof of insurability B. Changes in the insuring clause C. Premium increase D. Premium decrease

Proof of insurability

The two major actions required for a policyholder to comply with the Reinstatement Clause are

Provide evidence of insurability, pay past due premiums

All of the following are considered to be nonforfeiture options available to a policyowner EXCEPT Extended term insurance Cash surrender Reduction of Premium Reduced Paid-up insurance

Reduction of Premium

A policyowner may exercise which of these dividend options that uses the dividend to pay all or part of the next premium due?

Reduction of premium dividend option

A life insurance policyownere does NOT have the right to

Revoke an absolute assignment

An endorsement found in an insurance plan which modifies the provisions of the policy is called a(n)

Rider

James is the insured on a life insurance policy where his age was misstated on the application. Which of the following is CORRECT regarding the death benefit amount?

The death benefit paid will be what the premium would have purchased at the correct age

A whole life insurance policy accumulate cash value that becomes

The policy loan value which the insured may borrow against

If an insured dies during the grace period with no premiums paid

The policy would be payable, minus the premium amount

All of these are valid options for what a policyowner may do with policy dividends EXCEPT cash outlay to the policyowner accumulate without interest reduction in policy premium buy additional insurance coverage

accumulate without interest

Ownership of a life insurance policy may be temporarily transferred with a(n)

collateral assignment

All of these are standard exclusions found in a life insurance policy EXCEPT hazardous occupations aviation disability war

disability

A guaranteed issue insurance policy has no

medical underwriting

A rider that assures premiums will be paid on a juvenile policy until the child reaches a specific age is called a(n) waiver of premium rider payor rider automatic premium loan rider juvenile waiver rider

payor rider

The free-look provision gives the policyowner

the right to return the policy for a full refund within a specified number of days