Life Insurance policy Riders, Provisions, Options, and Exclusions.
What do you find on the insuring clause?
-parties to the contract -length of coverage -premium to be paid -amount of death benefit
What are the 3 nonforfeiture options in life insurance policies?
Cash surrender Reduced paid-up Extended term
Under what nonforfeiture option does the company pay the policy's surrender value and have no further obligations to the policyowner?
Cash surrender.
What required provision protects against unintentional policy lapse?
Grace period.
When a reduced-paid up nonforfeiture option is chosen, what happens to the face amount of the policy?
It is reduced to the amount of what the cash value would buy as a single premium.
Which of the following is true of a children's rider added to an insured's per added to an insured's permanent life insurance policy?
It is term coverage that is convertible to permanent insurance at or prior to the child reaching the max coverage age.
Which of the following settlement options in life insurance is known as straight life?
Life income
What type of beneficiary can be changed at any point by the policyowner?
Revocable.
What term is used to describe methods of payment of the death benefit to the beneficiary upon the insured's death?
Settlement options.
What happens to a policy's cash value an extended term nonforfeiture option?
The cash value is converted to the same face amount as in the whole life policy.
What does the term double indemnity mean?
The insurer will pay a benefit of twice the face amount.
In the fixed-period settlement option, how will the number of installments for the death benefit proceeds determine the amount of the installments.
The longer the period selected, the smaller each installment will be.
Who pays the premium and has complete ownership over the policy?
The owner
What is the purpose of free-look period?
To allow the insured to return the policy with a full refund.
What is collateral assignment?
When you give up half ownership of the policy.
To meet the requirements of the entire contract policy provision, an insurance policy must contain what?
A copy of the original insurance application.
What settlement options are available in life insurance policies?
Lump-sum / cash, fixed period, fixed amount, life income, interest only.
If a settlement option is not chosen by the beneficiary or policyowner, which option will be used?
Lump-sum payment.
When will a contingent beneficiary receive death benefit from a life insurance policy?
When the primary beneficiary dies before the insured.
What is the purpose of settlement options in life insurance policies?
To determine how the death benefit will be paid.
What is the purpose of the automatic premium loan provision?
Tp prevent the unintentional lapse of a policy because of nonpayment of the premium.
What life policy rider allows the company to forgo collecting the premium if the insured becomes disabled?
Waiver of premium.
What are the most common exclusions in life insurance policies?
War Military service Hazardous occupation Aviation
When can an insurance company use suicide as a defense against paying a death claim?
When suicide is committed within a specific period of time after the policy is purchased (2 years)
What is the name for a life insurance policy rider that provides coverage on the insured family members?
Other-insured rider.
What dividend option can increase the death benefit of the existing life policy?
Paid-up additions.
What dividend option will be automatically selected by the company if not chosen by the policyowner?
Paid-up additions.
An insurer has discovered a representation on a life insurance policy application regarding the insured's age. The insured is 10 years older than he stated on the application. What will the insurer do regarding the death benefit?
Pay a reduced death benefit.
Which of the following riders would not cause the death benefit to increase?
Payor benefit rider
Who has the right to the cash value of a life insurance policy?
Policyowner
When the interest only settlement options, what happens to the policy's death benefit?
Policy proceeds are retained by the insurance company. Only the interest is paid to the beneficiary.
What nonforfeiture option provides coverage for the longest period of time?
Reduced paid-up.
Who controls changes in premium payments, face values, and loans in a life insurance policy?
Policyowners.
What beneficiary designation has first claim to the death proceeds of a life insurance policy?
Primary beneficiary.
What is a grace period?
30 days after the premium due date. If not paid the policy will lapse.
What are the dividend options in life insurance policies?
Cash, reduced premium, accumulation at interest, paid-up option, one-year term, and acclamation of endowment.
What life insurance policy provision states that both the policy and a copy of the application form the contract between the policyowner and the insurer?
Entire contract.
What nonforfeiture option is automatically selected by the company if not chosen by the policyowner?
Extended term.
What is an absolute assignment?
Give the rights of ownership to him/her.
A policyowner borrowed a portion of cash value from his Whole Life policy. If the loan is not repaid how will that affect the death benefit to the beneficiary?
The amount owed will be subtracted from the death benefit.
An application for life insurance misstated her age on the policy application. How will this affect the death benefit?
The benefit will be adjusted to the amount the insured could obtain for her age.
With the reduction of premium dividend option. How is the dividend used?
The dividend is applied to the next years premium.
When a policyowner designates a group of individuals as the beneficiary of a life insurance death benefit without specifically naming the individuals, this is called?
Class designation.
An insured will be allowed to reactivate her lapsed life insurance policy if action is taken within a certain period of time, and proof of insurability. which policy provision allow this?
Reinstatement provision.
What are policy dividends?
Return of unused premiums.