Chapter Exam 2 - Life Provisions

P is blinded in an industrial accident. Which provision of his life insurance policy will pay a stated benefit amount?

Accidental Death and Dismemberment clause *An AD&D clause provides benefits for death due to an accident or for the loss of one or more hands, feet, arms, legs, or loss of sight.

What action can a policyowner take if an application for a bank loan requires collateral?

Assign policy ownership to the bank

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 preform more than 2 Activities of Daily Living (ADL's) *A long-term care rider in a life insurance policy may trigger a benefit in the event of the inability of the insured to preform more than 2 Activities of Daily Living (ADL's)

All of these statements about the Waiver of Premium provision are correct EXCEPT:

Insured must be eligible for Social Security disability for claim to be accepted

Which of these are NOT an example of a Nonforfeiture option? Extended Term Reduced Paid-up Cash Surrender Life Income

Life Income

The Accelerated Death Benefit provision in a life insurance policy is also known as a(n):

Living Benefit

All of these statements concerning Settlement Options are true, EXCEPT: -Increased proceeds can be provided through accumulation of interest -Rapid depletion of proceeds can be avoided -Proceeds can be administered by the insurance company -Only the beneficiary may select

Only the beneficiary may select *Settlement options may be selected by the policyowner.

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

Variable Universal Life *Variable Universal Life is comprised of monthly mortality charges and self directed investment choices.

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. *Even through premiums are waived because of the disability, the insured will continue to receive dividends just as if the insured were still making payments themselves.

Which life insurance rider typically appears on a Juvenile life insurance policy?

Payor Benefit rider *A payor benefit rider provides for a waiver of premium if the adult-payor of the policy dies or becomes totally disabled.

Which of the following provisions guarantees that premiums will be waived if a Juvenile Life policyowner becomes disabled?

Payor clause

What benefit does the Payor clause on a Juvenile Life policy provide?

Premiums are waived if payor becomes disabled

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

Reinstatement Provision *In cases where a policyowner wishes to reinstate a lapsed policy, the reinstatement provision allows the policyowner to do so with some limitations.

L takes out a life insurance policy and dies 10 years later. During the claim process, the insurer discovers that L had understated her age on the application. Under the Misstatement of Age provision, the insurer will:

adjust the death benefit to a reduced amount

What action will an insurer take if an interest payment on a policy loan is not made on time?

automatically add the amount of interest due to the loan balance *Unpaid interest from a policy loan is added to the loan balance if not paid by the due date.

Which provision prevents an insurer from changing the terms of the contract with the policyowner by referring to documents not found within the policy itself?

Entire Contract Provision *The entire contract provision, found at the beginning of the policy, states that the policy document, the application (which is attached to the policy), and any attached riders constitute the entire contract.

The agreement in a life insurance contract that states a specific sum of money will be paid to a designated person upon an insured's death is called a(n):

Insuring agreement *The insuring clause or provision sets forth the company's basic promise to pay benefits upon the insured's death.

M had an annual life insurance premium payment due January 1. She died January 10 without making the premium payment. What action will the insurer take?

Pay face amount minus the past due premium *In this situation, the insurer would pay the death benefit less the past-due premium because death occurred within the grace period.

Which of these life insurance riders allows the applicant to have excess coverage?

Term Rider

A life insurance policy which ensures that the premium will be paid if the insured becomes disabled has what kind of rider attached?

Waiver of Premium *The Waiver of Premium is a rider on a life insurance policy that guarantees that the premium will be paid if the insured is disabled for a specified period of time.