Exam FX Life Policy Riders, Provisions, Options, and Exclusions
Which option is being utilized when the insurer accumulates dividends at interest and then uses the accumulated dividends, plus interest, and the policy cash value to pay the policy up early?
Paid-up option
If a insured continually uses the automatic premium loan option to pay the policy premium
The policy will terminate when the cash value is reduced to nothing.
What is the purpose of a fixed-period settlement option?
To provide a guaranteed income for a certain amount of time
Regarding the free-look provision, the insurance company
Must allow the policyowner to return the policy for a full refund
The two types of assignments are
Absolute and collateral
The life insurance policy clause that prevents an insurance company from denying payment of a death claim after a specified period of time is known as the
Incontestability clause
What is the waiting period on a Waiver of Premium rider in life insurance policies?
6 months
An insured misstates her age at the time the life insurance application is taken. This misstatement may result in
Adjustment in the amount of death benefit
Which rider, when attached to a a permanent life insurance policy, provides and amount of insurance on every family member?
Family term rider
What is the other term for the cash payment settlement option?
Lump sum
Children's riders attached to whole life policies are usually issued as what type of insurance?
Term
A rider attached to a life insurance policy that provides coverage on the insured's family members is called the
Other-insured rider
If an insured recieves accelerated death benefits, what is the least amount of the original death benefit that the beneficiary would receive after the insured's death?
0%
Which of the following factors determines the amount of each installments paid in a Life Income Option arrangement?
Recipient's life expectancy and amount of principal
A father owns a life insurance policy on his 15-year-old daughter. The policy contains the optional Payor Benefit rider. If the father becomes disabled, what will happen to the life insurance premiums?
The insured's premiums will be waived until she is 21
A business owner was trying to obtain a bank loan to fund the purchase of a new business facility, but the bank required proof of additional assets to secure the loan. The business owner then decided to use her $250,000 life insurance policy to secure the loan. Which provision makes this possible?
Collateral assignment
An insured purchased a life insurance policy on his life naming his wife as primary beneficiary, and his daughter as contingent beneficiary. Under what circumstances could the daughter collect the death benefit?
If the primary beneficiary predeceases the insured
The paid-up addition option uses the dividend
To purchase a smaller amount of the same type of insurance as the original policy
Which provision of a life insurance policy states the insurer's duty to pay benefits upon the death of the insured, and to whom the benefits will be paid?
Insuring clause
An insured purchases a policy in of 2008 and died in 2013. The insurance company discovers at that time that the insured concealed informati9n during the application process. What can they do?
Pay the death benefit
An insured pays an annual premium to his insurer. In return, the insurer promises to pay benefits in accordance with the terms of the contract. This is called
Consideration
All of the following are Nonforfeiture options EXCEPT
Interest only
The type of settlement option which pays throughout the lifetimes of two or more beneficiaries is called
Joint and survivor
Which of the following best describes fixed-period settlement option
Both the principal and interest will be liquidated over a selected period of time
Which is TRUE about the cash surrender nonforfeiture option?
Funds exceeding the premium paid are taxable as ordinary income
What is the term for how frequently a policyowner is required to pay the policy premium?
Mode
Z falls from the roof of his house while fixing it and damages his spinal column enough to render him disabled for a year. His insurance policy carries a Disability Income Benefit rider. Which of the following benefits will Z receive?
Monthly premium waiver and monthly income
The sole beneficiary of a life insurance policy dies before the insured. If the policyowner fails to change the beneficiary before the insured's death, the proceeds of the policy will go to
The insured's estate
Which nonforfeiture option has the highest amount of insurance protection?
Extended Term
Which of the following policy components contain the company's promise to pay?
Insurance clause
Which of the following information will be stated in the consideration clause of a life insurance policy?
The amount of premium payments
Items stipulated in the contract that the insurer will not provide coverage for are found in the
Exclusions clause
A life insurance policy does not have a war clause. If the insured is killed during a time of war, what will the beneficiary receive from the policy?
The full death benefit
All of the following are true regarding the guaranteed insurability rider EXCEPT
The rider is available to all insureds with no additional premium
Under an extended term nonforfeiture option, the policy cash value is converted to
The same face amount as in the whole life policy
Which of the following protects the insured from an unintentional policy large due to a nonpayment of premium?
Automatic premium loan
What is the benefit of choosing extended term as a nonforfeiture option?
It has the highest amount of insurance protection.
Which two terms are associated directly with the premium?
Level or flexible
Which life insurance settlement option guarantees payments for the lifetime of the recipient, but also specifies a guaranteed period, during which, if the original recipient dies, the payments will continue to a designated beneficiary?
Life income with period certain
The dividend option in which the policyowner uses dividends to purchase a term policy for one year is referred to as the
One-year term option
Which of the following allows the insurer to relieve a minor insured from premium payments if the minor's parents have died or become disabled?
Payor Benefit
Which of the following statements is TRUE concerning irrevocable beneficiaries?
They can be changed only with the written consent of that beneficiary.
The policyowner pays for her life insurance annually. Until now, she has collected a nontaxable dividend check each year. She has decided that she would rather use the dividends to help pay for her next premium. What option would allow her to do this?
Reduction of premium
Which of the following statements is TRUE about a policy assignment?
It transfers rights of ownership from the owner to another person.
The insured had his wife named as the beneficiary of his life insurance policy. To ensure that his wife had income for life after the insured's death, he chose the life incomes settlement option. The amount of payments will be determined by taking into account all of the following EXCEPT
The insured's age at death
The policyowner wants to make sure that upon his death, the life policy will pay a portion of the proceeds annually to his spouse, but that the principal will be paid to their children when they reach a certain age. Which settlement option should the policyowner choose?
Interest only option
An insured has chosen joint and 2/3 survivor as the settlement option. What does this mean to the beneficiaries?
The surviving beneficiary will continue receiving 2/3 of the benefit paid when both beneficiaries were alive.
An insured receives an annual life insurance dividend check. What term best describes this arrangement?
Cash option
When may an insurance company use suicide as a defense against paying a death claim?
When death occurs within a specified period of time after the policy was issued.
An insured has a continuous premium whole life policy. She would like to use the policy dividends to pay off her policy sooner than would have been possible otherwise. What dividend option could she use?
Paid-up option
Under which nonforfeiture option does the company pay the surrender value and have no further obligations to the policyowner?
Cash surrender
An insured has had a life insurance policy that he purchased 3 years ago when he was 40 years old. He is killed in an automobile accident and it is discovered that he is actually 45 years old, and not 43, as stated on the application. What will the company do?
Pay a reduced death benefit
Nonforfeiture values guarantee which of the following for the policyowner?
That the cash value will not be lost
Which is NOT true about beneficiary designations?
The beneficiary must have insurable interest in the insured.
A couple owns a life insurance policy with a Children's Term rider. Their daughter is reaching the maximum age of dependent coverage, so she will have to convert to permanent insurance in the near future. Which of the following will she need to provide for proof of insurability?
Proof of insurability is not required
