life insurance ch. 3&4

Elizabeth is the beneficiary of a life insurance policy. She is receiving the death benefit in payments of $10,000 per month until the principal and interest has been paid out. Which option was chosen?

Fixed amount

Which of these us not a characteristic of the accelerated death benefit option?

the benefit can be offered as a rider at a specific extra cost or may be at no cost

If the beneficiary dies from the same accident as the insured individual, the insurer will proceed as if

the insured outlived the beneficiary

Pat owns a 20-pay life policy with a paid-up dividend option. Which of the following statements is true?

the policy may be paid up early by using policy dividends

Dorian exercised a nonforfeiture option by using his life policy's cash value to purchase an extended term insurance option. When the term insurance expires,

the protection ends

The free-look provision gives the policy owner

the right to return the policy for a full refund within a specified number of days

A life insurance policy that contains a guaranteed interest rate with the chance to earn a rate that is higher than the guaranteed rate is called

universal life

A life insurance policy that is subject to a contract interest rate is referred to as

universal life

A partial surrender is allowed in which of the following life policies?

universal life

Joe has a life insurance policy that has a face amount of $300,000. After a number of years, the policy's cash value accumulates to $50,000 and the face amount becomes $350,000. What kind of policy is this?

universal life policy

Shawn, Mike, and Dave are brothers who have a $100,000 "first to die" joint life policy covering all three of their lives. If Mike dies first, the policy proceeds

will no longer provide insurance protection

A renewable term life insurance policy allows the policyowner the right to renew the policy

without producing proof of insurability

A spouse and child can be added to the primary insured's coverage as what kind of rider?

Family term

Which of these riders will pay a death benefit if the insured's spouse dies?

Family term insurance rider

What is the primary feature of a viatical settlement?

reduced death benefit prepayment

what is the automatic continuance of insurance coverage referred to as?

renewal

Term insurance is appropriate for someone who

seeks temporary protection and lower premiums

Which type of multiple protection policy pays on the death of the last person?

survivorship life policy

What types of life insurance are normally used for key employee indemnification?

term,whole,and universal life insurance

Pre-death distributions from a modified endowment contract (MEC) receive different tax treatment than other life insurance policies because

the MEC tends to be an investment vehicle

what is the name of the provision which states that a copy of the application must be attached to the policy when issued?

Entire Contract

An example of naming a beneficiary by class would be

"to the children born of my union with Ned Jackson

which of these premium payment frequencies is not typically available to a policyowner?

Bi-weekly

Jonas is a whole life insurance policyowner and would like to add coverage for his two children. Which of the following products would allow him to accomplish this?

Child term rider

Naming a contingent beneficiary as "all surviving children" is described by which term?

Class designation

Pat is insured with a life insurance policy and Karen is his primary beneficiary. They are both involved in an automobile accident where Pat dies instantly and Karen dies 5 days later. Which policy provision will protect the rights of the contingent beneficiary to receive the policy benefits?

Common disaster clause

How is the cost of a policy affected when a policyowner pays premiums more frequently?

Increases

What happens to the total amount of premium paid for an insurance policy when the payment frequency increases?

Increases

What is the purpose for having an accelerated death benefit on a life insurance policy?

It allows for cash advances to b e paid against the death benefit if the insured becomes terminally ill

Insurance premium is determined by each of the following factors EXCEPT

Liquidity

A beneficiary has just received a claim payment for a life insurance policy. Which of the following is TRUE regarding the federal income tax liability owed?

No federal income tax is owed on life insurance proceeds

An interest-sensitive life insurance policyowner may be able to withdraw the policy's cash value interest free. The provision that allows this is called

Partial surrender

Which type of rider will waive the premium on a child's life insurance policy if the parent paying the premium dies?

Payor benefit

Under a Modified Endowment Contract, what are the likely tax consequences?

Pre-death distributions will become taxable

Kurt is an active duty serviceman who was recently killed in an accident while home on leave. Which military service exclusion clause would pay upon his death?

Results

What is a corridor in relation to a Universal Life insurance policy?

The gap between the total death benefit and the policy's cash value

Reggie purchased a life insurance policy with a face amount of $500,000. After 15 years, the cash value has accumulated to $100,000 and the policy's face amount has become $600,000. Which type of life insurance policy is this?

Universal Life

Which type of policy combines the flexibility of a universal life policy with investment choices?

Variable universal life policy

a policy owner can receive a percentage payment of the death benefits prior to death by using what kind of contract?

Viatical settlement agreement

Which of these would be the best example of a limited pay life insurance policy?

Whole life policy with premiums paid up after 20 years

a single premium cash value policy can be described as

a policy that is paid up after only one payment

which of these is considered to be a living benefit option in a life insurance policy?

accelerated death benefit

The double indemnity provision in a life insurance policy pertains to an insured's death caused by a(n)

accident

Ownership of a life insurance policy may be temporarily transferred with a(n)

collateral assignment

Life insurance policies will normally pay for losses arising from

commercial aviation

Where would policy proceeds be paid if both the insured and primary beneficiary were killed in the same accident?

contingent beneficiary

Which of these is affected by frequency of an insurance policy's premium payment?

cost

The least expensive option to pay off a 30 year mortgage balance would be

decreasing term life

A life insurance policyowner was injured in an automobile accident which results in a total and permanent disability. Which rider would pay a monthly amount because of this disability?

disability income rider

Which type of life insurance policy pays the face amount at the end of the specified period if the insured is still alive?

endowment policy

which of these would limit a company's liability to provide insurance coverage?

exclusion

An insurer will accept a premium from the insured and continue the coverage in full force as though it was NOT late during which time period?

grace period

A business will typically use which type of life insurance to cover their employees?

group policy

Level premium term life insurance policies

have premiums that are averaged over the policy period

Which settlement option involves having the proceeds remain with the insurer and earnings paid on a monthly basis to the beneficiary?

interest only

which settlement option involves having the proceeds remain with the insurer and earnings paid on a monthly basis to the beneficiary?

interest only

A life insurance policy written on one contract for two people in which it is payable upon the first death is called

joint

which type of life insurance is normally associated with a payor benefit rider?

juvenile insurance

Which of these is not considered to be a common life insurance nonforfeiture option?

life income annuity

A limited payment whole life policy provides

lifetime protection

A guaranteed issue insurance policy has no

medical underwriting

The premium payment mode that results in the highest overall cost would be

monthly

Over the course of a year, which premium payment mode is most expensive?

montly

A whole life policy option where extended term insurance is selected is call a(n)

nonforfeiture option

A provision in a whole life policy that allows a policyowner to terminate the policy in return for a reduced paid-up policy of the same type is called a(n)

nonforfeiture provision

A beneficiary change can occur

normally at any time during the policy term

A provision that allows a policyowner to withdraw a policy's cash value interest free is a(n)

partial surrender