Life Insurance Policy Provisions, Riders, and Options
Which nonforfeiture option provides coverage for the longest period of time? A Accumulated at interest B Reduced paid-up C Extended term D Paid-up option
B/
If a life policy allows the policyowner to make periodic additions to the face amount at standard rates, without proving insurability, the policy includes a A Guaranteed insurability rider. B Paid-up additions option. C Cost of living provision. D Nonforfeiture option.
A
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? A Interest only option B Life income with period certain C Joint and survivor D Fixed amount option
A
What would be an advantage to naming a contingent (or secondary) beneficiary in a life insurance policy? A It determines who receives policy benefits if the primary beneficiary is deceased. B It allows creditors to receive payment out of the proceeds. C It ensures the policy proceeds will be split between the primary and contingent beneficiaries. D It requires that someone who is not the primary beneficiary handles the estate.
A
All of the following are dividend options EXCEPT A Fixed-period installments. B Accumulated at interest C Reduction of premium. D Paid-up additions.
A/
A policyowner fails to pay the premium due on his whole life policy after the grace period passes, but the policy remains in force. This is due to what provision? A Assignment B Automatic premium loan C Waiver of premium D Incontestability period
B
What is the benefit of choosing extended term as a nonforfeiture option? A It can be converted to a fixed annuity. B It has the highest amount of insurance protection. C It matures at age 100. D It allows for coverage to continue beyond maturity date.
B
An insured owns a $50,000 whole life policy. At age 47, the insured decides to cancel his policy and exercise the extended term option for the policy's cash value, which is currently $20,000. What would be the face amount of the new term policy? A $20,000 B $25,000 C $50,000 D The face amount will be determined by the insurer.
C
The rider in a whole life policy that allows the company to forgo collecting the premium if the insured is disabled is called A Waiver of cost of insurance. B Payor benefit. C Waiver of premium. D Guaranteed insurability.
C
What is the purpose of a fixed-period settlement option? A To provide a guaranteed income for life B To provide a guaranteed amount of money each month C To provide a guaranteed income for a certain amount of time D To settle the insurance company's liability
C
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? A The primary and contingent beneficiaries share death benefits equally B With the primary beneficiary's written consent C If the insured died from accidental means D If the primary beneficiary predeceases the insured
D
Which nonforfeiture option has the highest amount of insurance protection? A Decreasing Term B Reduced Paid-up C Extended Term D Conversion
C/
If a beneficiary wants a guarantee that benefits paid from principal and interest would be paid for a period of 10 years before being exhausted, what settlement option should the beneficiary select? A Life with period certain B Fixed amount C Interest only D Fixed period
D
What type of insurance would be used for a Return of Premium rider? A Level Term B Decreasing Term C Annually Renewable Term D Increasing Term
D
Which of the following factors determines the amount of each installment paid in a Life Income Option arrangement? A Projected income B Recipient's health and death benefits C Projected life insurance and health insurance D Recipient's life expectancy and amount of principal
D