L/A/H Insurance . C5.Life Insurance Policy Provisions . Questions

If a policy owner wishes to convert policy to another type, she is allowed to do so because of the conversion option. Which of the following will result if the policy type is changed form whole life to term insurance? A. The death benefit will be adjusted B. Proof of insurability will be required C. The face amount will be increased D. The premium will be increased

B

Most grace periods which appear in life insurance policies provide for a period of A. 30 days B. 31 Days C. 35 Days D. 60 Days

B

A policy loan made against the cash value does not have to be repaid. however, when the insured dies and there is an outstanding unpaid loan, how is the death benefit treated? A. The full face amount is paid B. the proceeds are reduced by the outstanding loan C. The death benefit is reduced by the interest owed on the loan. D. The death benefit is paid less any outstanding premium owed

B

An insured is required to receive a copy of the policy, application, and any riders, endorsement, or other addendum. Which provision does this describe? A. Incontestable clause B. Entire contract provision C. Free look provision D. Owner's rights povision

B

Dan Devine purchases a $100,000 life insurance policy and names his daughters Mary and Pat as primary beneficiaries to receive an equal share of the death benefit. Dan's wife Eileen is the contingent beneficiary. Pat dies in 2002 and Dan dies in 2003. How are the proceeds distributed? A. Mary receives $50,000 and Pat's estate receives $50,000 B. Mary receives $100,000 C. Mary receives $50,000 and Eileen receives $50,000 D. Eileen Receives $100,000

B

Once a policy has been reinstated, the policy is again "contestable" for what period of time? A. One year B. Two years C. Three years D. Four years

B

Theresa is covered by a $100,000 whole life policy. She borrows $4,000 against the cash value without repayment. Her $1,000 premium is due on January 2nd, but is not paid. If Theresa dies on January 15th, what will be paid to her primary beneficiary? A. Nothing B. $95,000 C. $96,000 D. $99,000

B

What life insurance clause or provision requires the insurer to provide full policy documentation and eliminates forms, riders, etc. not contained or made part of the actual contract? A. Incontestable Clause B. Entire Contract Provision C. Free-Look Provision D. Owner's Rights Provision

B

What provision allows the insurer to void a contract and return premiums if it is determined during the initial two years that the insured lied about his or her health? A. Reinstatement provision B. Incontestable provision C. Grace Period Provision D. Suicide Clause Provision

B

Which mandatory provision allows an insurance company the right to rescind or void a policy if it discovers that an applicant has provided a material misrepresentation when applying for coverage? A. Reinstatement provision B. Incontestable Clause C. False Declaration Clause D. Grace Period

B

Which mandatory provision or clause allows an insurance company the right to rescind or void a policy if it discovers that an applicant has made a material misrepresentation when applying for coverage? A. Reinstatement Provision B. Incontestable Clause C. False Declaration Clause D. Grace Period

B

Which of the following best describes the beneficiary designation of per stirpes? A. Proceeds are only paid to a secondary beneficiary. B. Through the root or family line. C. Proceeds are payable to specific designees. D. To an immediate family member not named individually.

B

Which of the following is a common life insurance policy exclusion? A. Death resulting from AIDS/HIV B. Death caused from war C. Death caused by accidental means D. Death caused by drowning

B

Which of the following is true regarding an irrevocable beneficiary? A. This designation may be changed at anytime by the policyowner B. this beneficiary has the right to receive a copy of the policy C. This beneficiary has no rights in the policy D. None of the above

B

Willie purchase a policy on June 11, 2016 and its delivered 18 days later. The ten-day free-look would commence on: A. June 28, 2016 B. June 29, 2016 C. June 30, 2016 D. June 31, 2016

B

What life insurance policy provision allows the policyholder to select the face amount of protection, name a beneficiary, or borrow from the policy cash value? A. Entire Contract B. Incontestable Clause C. Owner's Rights Provision D. Insuring Clause

C

What life insurance policy provision allows the policyholder to select the face amount of protection, name a beneficiary, or borrow from the policy cash value? A. Entire contract B. Incontestable C. Owner's Rights D. Insuring Clause

C

What life insurance policy provision enables the policy owner to name or change the beneficiary? A. Beneficiary provision B. Irrevocable Provision C. Assignment Provision D. Ownership Provision

C

What type of assignment has taken place when the policyowner transfers some, but not all of her rights to another party when pledging the cash value of her policy in order to secure a loan? A. Credit Assignment B. Conditional Assignment C. Collateral Assignment D. Loan Value Assignment

C

A policyowner decides he wants to ensure for the care of his 4-year-old daughter in the event of his death. Due to the age of the child, he will probably list as his beneficiary: A. His ex-wfie B. His estate C. The daughter's youngest grandparent D. A Trust

D

A policyowner decides he wants to insure for the care of his 4-year-old daughter in the event of his death. Due to the age of the child, he will probably list his beneficiary as: A. His ex-wife B. His estate C. The daughter's youngest grandparent D. A trust

D

An insured dies and the death benefit is paid to the named beneficiary. The beneficiary dies 3 months later. There are 3 surviving children. Any remaining proceeds from the policy covering the insured would be paid to which of the following? A. To the estate of the deceased insured B. To the surviving children C. To the oldest surviving beneficiary D. To the estate of the decease beneficiary

D

Who is the only party allowed to take a loan from an annuity contract? A. The irrevocable beneficiary of the annuity B. The Annuitant C. The beneficiary of the annuity D. the owner of the annuity

D

Other than senior needs contracts, how long is the free look normally? A. 10 B. 20 C. 30 D. 60

A

Per capita means: A. Per Person B. Per Family C. Per family line D. Per lineage

A

The Free Look is generally how many days? A. 10 B. 20 C. 30 D. 60

A

Which of the following beneficiary designations cannot be changed by the policyowner unless he receives written consent from the beneficiary? A. Irrevocable beneficiary B. Revocable beneficiary C. Primary beneficiary D. Contingent beneficiary

A

Which of the following policy provisions prevents an insurer from denying a death claim in the future after the purchase of a life insurance policy? A. Entire contract clause B. Insuring Clause C. Consideration Clause D. Owner's Rights clause

A

Which premium mode would not have any additional surcharges for premium collection? A. Annual B. Semi-Annual C. Quarterly D. Monthly

A

Who is the only party that can change a policy beneficiary depiction? A. The policyowner B. The insurer C. The beneficiary D. The primary beneficiary

A

James and Jamie are a married couple that die in a common accident. It is not possible to determine who dies first. According to the Uniform Simultaneous Death Act, when an insured and their primary beneficiary die in a common accident and it cannot be determined who died first, what does the insurance company assume? A. The beneficiary died first. B. The insured died first. C. Both parties died at exactly the same time. D. The beneficiary is still alive

A When an insured and her primary beneficiary die in a common accident, the insurer assumes the beneficiary died first, essentially to protect the rights of the contingent beneficiary to the policy death benefits.

A policy owner conditionally assigns the cash value of a whole life policy to a lender in order to secure a loan. If the insured dies before the loan is paid off, how will the death benefit be divided? A. The death benefit listed in the policy will be paid to the beneficiary B. The proceeds are paid to the beneficiary and the land amount is forgiven C. The assignee receives its interest with the remainder paid to the primary beneficiary D. The lender receives the proceeds of the policy

C

A type of assignment where some but not all rights are transferred to another party best describes: A. Debt Consolidation B. Lender Assignment C. Collateral Assignment D. Absolute Assignment

C

An insurer discovers that the actual age of an insured was 5 years greater than listed on the policy application. What effect, if any, will this discovery have with regard to the death benefit? A. The death benefit will be increased. B. The policy will be voided. C. The death benefit will be decreased. D. There will be no change to the death benefit.

C

An insurer will take what type of action if the applicant misstates his age on a term life insurance application? A. Cancel the policy B. Cancel the policy and return the premium C. Adjust the death benefit D. Adjust the cash value

C

As a general rule, interest earned on insurance proceeds is: A. Seldom Taxable B. Often Taxable C. Always Taxable D. Never Taxable

C

At death, an insured is found to be 10 years older than actually listed on the application. Will this have any impact on the death benefit? A. The death benefit will be increased B. the policy will be voided C. the death benefit will be decreased D. there will be no changes to the death benefit

C

If a policy owner fails to pay the required premium by the end of the grace period, the policy will lapse. The policy owner may request reinstatement of the lapsed policy as long as such action is requested within what period of time following the lapse? A. One Year B. Two Years C. Three Years D. Five Years

C

What is the most important reason a policyowner may want to reinstate a lapsed policy? A. Higher premiums B. No new grace period C. The policy premium will be based on the original age of policy issue. D. This allows for an automatic increase of the death benefit up to 5 times its original value with no increase in premium.

C

What is the most important reason a policyowner my want to reinstate a lapsed policy? A. Higher premiums B. No new grace period C. The policy premium will be based on the original age of the policy issue D. Allows for an automatic increase of the death benefit up to 5 times its original value

C

Which life insurance policy provision verifies that an insurer is legally obligated to pay benefits described in a contract, assuming that an application is approved after the applicant has submitted her full consideration? A. Grace Period B. Consideration Period C. Insuring Clause D. Renewability Provision

C

Which of ht following would make sure that coverage continues in the event of a premium lapse for more than the grace period? A. Insuring clause B. Entire contract clause C. Automatic Premium Loan Provision D. Consideration Clause

C

Which of the following provisions allow the insurer to deny a claim if the insurer is killed while performing stunts in an air show? A. Aviation exclusion B. War exclusion C. Exclusion provision D. Motivation provision

C

Which provision protects a beneficiary against her creditors, assuming the death benefit itself is left with the insurer upon the death of the insured? A. Irrevocable Beneficiary Provision B. Beneficiary Protection Provision C. Spendthrift Provision D. Non-forfeiture Option

C

A husband and wife are killed simultaneously in an auto accident. What insurance term describes this horrible circumstance? A. Common Accident B. Non-Forfeiture Option C. Unfortunate Occurrence D. common Disaster

D

A life insurance policy premium is not made during the grace period. Which provision below, if selected, would allow a policy to remain in force assuming there is sufficient cash value available to offset the premium? A. Grace Period B. Premium Payment Provision C. Insuring Clause D. Automatic Premium Loan (APL)

D

Beneficiary depictions are very important in a life insurance contract. What statement below is NOT TRUE when describing a contingent beneficiary? A. Whether they receives a death benefit is contingent on all the primary beneficiaries predeceasing the insured. B. Husbands and wives often name their children as contingent beneficiaries. C. They are entitled to receive benefits prior to a tertiary beneficiary. D. They may share equally in the death benefit if verbal authorization is given from the primary beneficiary.

D

Bob applies for life insurance starting his age as 28. His annual premium is $150. Bob dies 20 years later and insurer discovers that he was really 35 years of age at the time of application and should have been paying $200 annually. Wha will the insurer do in this instance? A. Deny the claim due to misrepresentation B. Reduce the claim by 28/35ths C. Pay the face amount D. Reduce the claim by 150/200ths.

D

Death by suicide is not covered until the policy has been "on the books" for: A. 1 Year B. 60 Days C. 180 Days D. 2 Years

D

Each of the following types of life insurance must include a right to examine provision EXCEPT: A. annual renewable term insurance B. an endowment C. Whole Life Insurance D. Flight Insurance

D

How long does an insurer have to make the decision to reinstate a policy once all the paperwork and premiums have been submitted? A. 10 days B. 20 days C. 30 days D. 45 days

D

Jack Delivers a policy to Jill on February 24. When does the 10-day free-look period end? A. February 24 B. March 4 C. March 5 D. March 6

D

Joe Gerber owns a life insurance policy with an annual premium due date of February 14th. Joe does not pay premium by the due date and dies on March 16th. What action will the insurer take when the claims is filed? A. Deny the claim B. Deny the claim and return the premium C. Pay the claim D. Pay the claim less the owed premium

D

Most policies sold today have a _____ day grace period. A. 10 B. 20 C. 30 D. 31

D

Mrs. Smith is the beneficiary of her husband's $500,000 life insurance policy. When Mr. Smith dies, Mrs. Smith decides to leave the death benefit with the insurer and only receive interest payments each month. That year, she receives $24,000 worth of proceeds. Which choice below indicates the dollar amount, if any, Mrs. Smith will have to report as taxable income? A. $500,000 B. $490,000 C. $0 D. $24,000

D

Susan purchases a $1,000,000 Universal life insurance policy on her husband Ryan. Six months after the policy has been issued, Ryan commits suicide. What benefit, if any, will Susan be entitled to? A. $1,000,000 B. $0 C. $1,000,000 less premiums paid D. A return of premiums paid

D

The Grace Period in most life insurance contracts is: A. 30 days B. 7 days C. 10 days D. 31 days

D

The insured's consideration in a life insurance contract is the: A. Premiums Paid B. Promise to Pay C. Warranties attached to the policy D. Premiums paid and representations

D

The most common exclusion found on a life insurance contract is for: A. Sky-Diving B. Bungee Jumping C. Underwater welding D. War

D

The most expensive mode of premium payment is the: A. Annual mode B. Quarterly Mode C. Semi-Annual Mode D. Monthly mode

D

The policy plus a copy of the application makes up the: A. Insuring Clause B. Free look provision C. Policy Loan Provision D. Entire Contract

D

What is Assignment? A. it is the transfer of existing policy cash values to another party B. It is the legal transfer of the beneficiary's rights to another party C. it is the transfer of the insurance company's rights in the contract D. It is the legal transfer of the owner's rights and interest in a contract to another party

D

When reinstating a lapsed policy, how long does an insurer have to make the decision to reinstate once all paperwork and premiums have been submitted? A. 10 days B. 20 days C. 30 days D. 45 days

D

Which definition below lists the beneficiary that is only entitled to receive a death benefit, if the primary beneficiary has predeceased the insured? A. Tertiary B. Irrevocable C. Primary D. Contingent

D

Which of the following is protected by the common disaster clause? A. The primary beneficiary B. A revocable beneficiary C. An irrevocable beneficiary D. the contingent beneficiary

D

Which of the following statements regarding term conversion is NOT CORRECT? A. Conversion must take place within 31 days following the employee leaving the group. B. Term insurance is most often converted to individual universal life insurance. C. Individual underwriting is generally not required. D. Converting from Whole life to Term is not a concern to the underwriter.

D

Which policy listed below would have no policy loan option? A. Ordinary Whole life B. Universal life C. Variable life D. Annually Renewable Term

D

Which policy listed below would have no policy loan option? A. Ordinary Whole Life B. Universal Life C. Variable Life D. Annually Renewable Term

D

Which provision allows a portion of a life insurance death benefit to be provided to someone not listed as a policy beneficiary, but who is handling the final expenses of the deceased insured? A. Facility of Maintenance B. Spendthrift Provision C. Irrevocable Beneficiary Waiver Provision D. Facility of Payment

D

Which provision below, if selected, would allow a policy to remain in force assuming there is sufficient cash value available to offset the premium? A. Grace Period B. Premium Payment Provision C. Insuring Clause D. Automatic Premium Loan

D

Which statement below best describes the concept of assignment? A. It is the transfer of existing policy cash values to another party. B. It is the legal transfer of the beneficiary's rights to another party. C. It is the transfer of the insurance company's rights in the contract. D. It is the legal transfer of the owner's rights and interest in a contract to another party.

D