Chapter 4 Part Two Exam
Which life insurance clause prohibits an insurance company from questioning the validity of the contract after a stated period of time has passed?
Incontestable clause
A policyowner has a life insurance policy where she had listed her age on the application as 5 years younger than her actual age. If she dies and the insurer discovers the misstatement of age, how much will the insurance company pay?
Less than the face amount
Which of these is not a common life insurance nonforfeiture option?
Life income annuity
Joe is a life insurance policyowner who has failed to pay interest on his policy loan. What will result from this nonpayment?
Loan amount is increased to reflect the amount of interest due
Tim is confined to a nursing home but doesn't have a terminal illness. Which life insurance rider is designed to help pay for this type of expense?
Long term care benefit rider
What happens to a life insurance policy when the policy loan balance exceeds the cash value?
Policy will no longer be in force
If an insured dies during the grace period without having paid the premium, how much will the insurer pay?
Policy's face amount minus any premiums due
How is the insured protected if a payor benefit rider is attached to the life insurance policy?
Premium payments are waived in the event the premium payor dies or becomes disabled
Which statement regarding the life insurance premium for a children's rider is true?
Premium remains the same no matter how many children
Which of the following is not a dividend option for a life insurance policy?
Receiving the entire policy cash value
What effect can a long term care benefit rider have on a life insurance policy?
Reduced death benefit
What could be the potential result of taking out a cash value loan under a life insurance policy?
Reduces the amount receivable upon surrender of the contract
A life insurance policyowner would life a dividend option that results in a limited current outlay of funds. Which dividend option would be chosen?
Reduction of premium payment. The reduction of premium payment allows a policyowner to use the dividend to pay all or part of the next premium due on the policy
When a lapsed policy's premium has been paid current, it has the potential of being
Reinstated
A policyowner is permitted to take out a policy loan on a whole life policy at what point?
When the policy has a cash value
Which life insurance policy would be eligible to include an automatic premium loan provision?
Whole lie. An automatic premium loan provision is possible in whole life insurance because of the cash value that builds
A source of supplemental income for a life insurance policyowner can be derived from the
cash value
After the extended term life nonforfeiture option is chosen, the available insurance will be
level term for a stated period of time
A life insurance guaranteed insurability rider gives the insured the right, without proving insurability, to
periodically purchase additional insurance
The automatic premium loan provision can be accurately described as a
provision that provides a policy loan to pay any premiums by the end of the grace period
How long can an insurer legally defer paying the cash value of a surrendered life insurance policy?
6 months
A life insurance policy provision that has the ability to reduce the death benefit is called the
Accelerated (living) benefit
Which benefit is normally payable to a life insurance policyowner when the insured's life expectancy has been severely limited?
Accelerated (living) benefit
How may an insurance company classify an accidental death benefit on a life policy?
As an optional policy rider
Which of the following is not a condition that must be met for an accidental death benefit to be paid?
Cause of death must be from a job-related injury
Which of these is not a true statement of the war exclusion?
Civil insurrections apply. Civil insurrections fall under an illegal act or felony which are typically excluded from coverage as well
Which life insurance policy provision allows the policyowner to cancel the policy and receive a full refund within a limited period after the policy delivery?
Free look period
Which of the following is not guaranteed in a whole life policy?
Dividend scale
The absolute assignment of a life insurance policy results in
all incidents of ownership transferred to the assignee
An insured has a $25,000 whole life insurance policy with $6,000 cash value available. Under the extended term nonforfeiture option, what is the amount of insurance available to the insured.
$25,000. The extended term option uses the policy's cash value to purchase a level term insurance policy in an amount equal to the original policy's face value, for as long a period as the cash value will purchase
In the event of premium default, which life insurance provision will use the cash value to keep the policy in force?
Automatic premium loan
Which statement regarding the waiver of premium rider is accurate?
Cash payment is not directly provided to the policyowner
In what way is a life insurance policy affected by an accelerated benefit payment?
Decreases the death benefit
Which life insurance policy option allows the policyowner to have coverage equal to the net death benefit of the lapsed policy?
Extended term nonforfeiture option
Which benefit supplement added to a life insurance policy insured an entire family?
Family term rider
What is the name of the rider that provides an additional purchase option in a life insurance policy?
Guaranteed insurability rider
Which of the following is not subject to the promise to pay in an insuring clause?
How the premium is calculated
Which of the following statements is not true regarding a cash value loan against a life insurance policy?
Interest payments made by policyowner are deductible
Which of these would not be a valid reason to add the waiver of premium rider to a life insurance policy?
It allows a policy loan to cover premium payments if the policyowner becomes totally disabled
What happens to the death benefit of a life insurance policy if the insured elects a partial payment from the accelerated (living) benefit provision?
Reduced
Which of the following is true regarding a person receiving a waiver of premium benefit?
The insured must be disabled for a period of time
What happens when a policyowner borrows against the cash value of his life insurance policy?
The policy proceeds would be reduced by the outstanding loan balance
What is considered the collateral on a life insurance policy loan?
The policy's cash value
Which of these statements regarding the extended term insurance nonforfeiture option in a life policy is accurate?
The premium to purchase the coverage comes from the policy's cash value
A life insurance policy that includes a return of premium rider will pay the beneficiary how much upon the insured's death?
Total premiums paid plus the policy face amount
Scott has a life insurance policy in which the dividends are left with the insurance company. This particular policy may be paid up when the cash value plus accumulated dividends
equal the net single premium for the same face amount at the insured's attained age
A life insurance policy that contains an accelerated (living) benefit rider will provide funds if the
insured is expected to be confined to a nursing home for life
A life insurance policy's waiver of premium rider has the ability to
Relieve the insured of premium payments following an initial waiting period after the insured becomes totally disabled
What is payable to the policyowner if a whole policy is surrendered prior to its maturity date?
The cash value
How is collateral assignment used in a life insurance contract?
Transfers specific ownership rights to a creditor
