Life Insurance- Exam 2

Which of these is considered to be a Living Benefit option in a life insurance policy?

Accelerated death benefit

Which of the following is considered to be an alternative to a life settlement?

Accelerated death benefit rider

A rider that assures premiums will be paid on a juvenile policy until the child reaches a specific age is called a(n)

payor rider

In order to activate the reinstatement clause of a lapsed life insurance policy, the insured MUST

provide evidence of insurability to the insurer

Which dividend option would an insurer invest the policyowner's money and add any interest earnings as the dividends accrue?

Accumulation at Interest Option

Of the following dividend options, which of these is taxable?

Accumulation at interest

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

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

Barbara's policy includes a rider which allows her to purchase additional insurance at specific dates or events without evidence of insurability. This rider is called a(n)

Guaranteed insurability rider

Which of the following protects a policyowner from a misrepresentation caused by an innocent mistake?

Incontestable clause

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

Life income annuity

Joanne has a $100,000 whole life policy with an accumulated $25,000 of cash value. She would like to borrow $15,000 against the cash value. Which of the following statements is TRUE?

Net death benefit will be reduced if the loan is not repaid

Which situation accurately describes a reduced paid-up nonforfeiture option?

Policy has a decreased face amount

Which of the following is a reinstatement condition?

Proof of insurabiilty

All of the following are considered to be nonforfeiture options available to a policyowner EXCEPT

Reduction of Premium

James is the insured on a life insurance policy where his age was misstated on the application. Which of the following is CORRECT regarding the death benefit amount?

The death benefit paid will be what the premium would have purchased at the correct age

All of the following riders can increase the death benefit amount EXCEPT

Waiver of Premium

A provision that allows a policyowner to temporarily give up ownership rights to secure a loan is called a(n)

collateral assignment

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

collateral assignment

A waiver of premium rider allows an insured to waive premium payments if the insured is

completely and permanently disabled

Matt is applying for life insurance and requests a double indemnity rider. A double indemnity benefit will be payable to Matt's beneficiary if Matt

dies instantly from a car accident

All of these are standard exclusions found in a life insurance policy EXCEPT

disability

The suicide clause of a life insurance policy states that if an insured commits suicide within a stated period from the policy's inception, the insurer will only be liable for a return of premiums paid

minus indebtedness and without interest

If an insured dies during the grace period with no premiums paid

the policy would be payable, minus the premium amount

The free-look provision gives the policyowner

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

Loans obtained by a policyowner against the cash value of a life insurance policy

would not be treated as taxable income

If an insured's age on a life insurance policy has been misstated, what is the insurer's liability if the insured dies?

A prorated death benefit based on the amount of insurance the insured's premiums would have been if purchased at the correct age

An error was made on Mary's life insurance application. Which of the following areas do errors commonly occur on applications and for which the incontestable clause does NOT apply?

Age

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

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

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

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

Which of these is 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

An insured individual and the policy's beneficiary die from the same accident. The common disaster provision states the insurer will continue as if

the insured outlived the beneficiary

Ron has a life insurance policy with a face value of $100,000 and a cost of living rider. If the consumer price index has gone up 4%, how much may Ron increase the face value of the policy?

$4,000

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

The two major actions required for a policyholder to comply with the Reinstatement Clause are

provide evidence of insurability, pay past due premiums

A whole life insurance policy accumulates cash value that becomes

the policy loan value which the insured may borrow against

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

Under a life insurance policy, what does the insuring clause state?

The insurer's obligation to pay a death benefit upon an approved death claim

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

partial surrender

The automatic premium loan provision authorizes an insurer to withdraw from a policy's cash value the amount of

past due premiums that have not been paid by the end of the grace period