Chapter 8 Quiz

One life insurance policy provision specifies that the insurer cannot deny payment to the beneficiary because of concealment or misrepresentation if the life insurance policy has been in force for two years during the insured's lifetime. This provision is the ownership clause. incontestable clause. assignment clause. entire contract clause.

incontestable clause.

One life insurance policy provision permits the policyholder to pledge certain rights in the life insurance policy to secure a loan. This provision is called a(n) absolute assignment. collateral assignment. entire contract clause. policy loan provision.

collateral assignment.

Under which nonforfeiture option will permanent life insurance coverage be in force after the nonforfeiture option is exercised? reduced paid-up insurance extended term insurance cash value option fixed-amount option

reduced paid-up insurance

Which of the following statements is (are) true regarding life insurance policyholder dividends? I - Life insurance policies that pay dividends to policyholders are called participating policies. II - Life insurance policyholder dividends are guaranteed. I only II only both I and II neither I nor II

I only

All of the following are nonforfeiture options EXCEPT extended term insurance. reduced paid-up insurance. cash value. paid-up additions.

paid-up additions.

Elaine was diagnosed with a terminal illness. Her doctor said that her only chance of survival is an experimental treatment. The treatment is expensive and is not covered by Elaine's health insurance. Which life insurance policy provision will permit Elaine to use the life insurance proceeds before she dies to pay for her medical care? accidental death benefit rider cost of living rider guaranteed purchase option accelerated death benefits rider

accelerated death benefits rider

Eric purchased a cash value life insurance policy six years ago. He forgot to pay the premium that was due last week. Eric's coverage is still in force because of which life insurance policy provision? incontestable clause reinstatement provision entire contract clause grace period provision

grace period provision

All of the following are optional methods of settlement after the insured has died EXCEPT life income option. fixed-period option. reduced paid-up insurance. cash (lump sum).

reduced paid-up insurance.

Which of the following statements is (are) true with respect to life insurance policy loans? I - Interest must be paid on life insurance policy loans. II - If a policy loan has not been repaid when the insured dies, the outstanding loan balance is deducted from the proceeds paid to the beneficiary. both I and II I only neither I nor II II only

both I and II

Sheila would like to purchase a cash value life insurance policy. She is concerned, however, that if she becomes disabled she will be unable to pay the premiums as they come due. What provision can Sheila add to her policy to address this concern? accelerated death benefits rider reinstatement provision guaranteed purchase option waiver-of-premium rider

waiver-of-premium rider