life insurance policy provisions, options and riders
What provision in an insurance policy extends coverage beyond the premium due date?
Grace period
If an 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 a major problem with naming a trust as the beneficiary of a life insurance policy?
They are expensive to administer.
Who has the legal title of the property in a trust?
Trustee
An insured pays $1,200 annually for her life insurance premium. The insured applies this year's $300 worth of accumulated dividends to the next year's premium, thus reducing it to $900. What option does this describe?
Reduction of Premium
When an insured under a life insurance policy died, the designate beneficiary received the face amount of the policy as well as a refund of all the premiums paid. Which rider is attached to the policy?
Return of premium
An insured owns a life insurance policy. To be able to pay some of her medical bills, she withdraws a portion of the policy's cash value. There is a limit for a withdrawal and the insurer charges a fee. What type of policy does the insured most likely have?
Universal life
Life income joint and survivor settlement option guarantees
Income for 2 or more recipients until they die.
What is the benefit of choosing extended term as a nonforfeiture option?
It has the highest amount of insurance protection.
Which of the following statements is TRUE about a policy assignment?
It transfers rights of ownership from the owner to another person