Chp.3 Exam 2 Life Provisions

K pays on a $20,000 20-Year Endowment policy for 10 years and dies from an automobile accident. How much will the insurance company pay the beneficiary?

$20,000 death benefit

S buys a $50,000 whole life policy with a $50,000 Accidental Death and Dismemberment rider. S dies 1 year later of natural causes. How much will the insurer pay the beneficiary?

$50,000

A potential client, age 40, would like to purchase a Whole Life policy that will accumulate cash value at a faster rate in the early years of the policy. Which of these statements made by the producer would be correct? A.) Straight life accumulates faster than Limited-pay Life B.) 20-Pay Life accumulates cash value faster than Straight Life C.) Cash value accumulation of both 20-Pay Life and Straight Life depend on the insurer's financial rating D.)20-Pay Life and Straight Life accumulate cash value at the same rate

20-Pay Life accumulates cash value faster than Straight Life

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

Living Benefit

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

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

Term rider

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

In a life insurance policy, which feature states that the policy will not cover certain risks?

Exclusion

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

When does a Guaranteed Insurability Rider allow the insured to buy additional coverage?

at future dates specified in the contract with no evidence of insurability required

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

What is the Suicide provision designed to do?

safeguard the insurer from an applicant who is contemplating suicide

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

The option that provides an additional death benefit for a limited amount of time at the lowest possible cost is called a(n):

Accidental Death and Dismemberment rider (AD&D)

Which of the following Dividend options results in taxable income to the policyowner?

Answer: Accumulation at Interest -While policy dividends are not taxable, any interest paid on them is taxable income in the year the interest is credited to the policy.

N is a student pilot with a large life insurance policy. Which of these features would limit the insurer's obligation in the event N was killed while flying as a student pilot? A.) Misrepresentation B.) Exclusion C.) Collateral assignment D.) Concealment

B.) Exclusion

Which of these types of policies may NOT have the Automatic Premium Loan provision attached to it? A.) Modified Whole Life B.) 20-Pay Life C.) Decreasing Term D.) Endowment

C.) Decreasing Term

Which rider provides coverage for a child under a parent's life insurance policy?

Child term rider

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

Correct Answer: D.) Only the beneficiary may select

S buys a $10,000 Whole Life policy in 2003 and pays an annual premium of $100. S dies 5 years later in 2008 and the insurer pays the beneficiary $10,500. What kind of rider did S include on the policy?

Return of Premium Rider