LIFE ONLY_Chapter 5-Policy Provisions, Riders and Options

What provision in an insurance policy extends coverage beyond the premium due date? A. Waiver of premium B. Grace period C. Free look D. Automatic premium loan

B. Grace period

What kind of policy allows withdrawals or partial surrenders? A. Variable whole life B. Universal life C. 20-pay life D. Term policy

B. Universal life

Which of the following settlement options in life insurance is known as straight life? A. Life with period certain B. Fixed amount C. Life income D. Single life

C. Life income

Which of the following is true of a children's rider added to an insured's permanent life insurance policy? A. It is permanent insurance B. The policy covers only the natural children of the insured C. Each child covered must show evidence of insurability D. It is term coverage that is convertible to permanent insurance at or prior to the child reaching the maximum coverage age

D. It is term coverage that is convertible to permanent insurance at or prior to the child reaching the maximum coverage age

Which of the following allows the insurer to relieve a minor insured from premium payments if the minor's parents have died or become disabled? A. Payor benefits B. Jumping Juvenile C. Juvenile Premium Provision D. Waiver of Premium

A. Payor benefits

Which of the following is true regarding the spendthrift clause in life insurance policies? A. It allows the beneficiary to select a different settlement option B. It is only used when the beneficiary is a minor C. It is the same as irrevocable settlement clause D. It can protect the policy proceeds from creditors of the beneficiary

D. It can protect the policy process from creditors of the beneficiary

An insured has chosen joint and 2/3 survivor as the settlement option. What does this mean to the beneficiaries A. the beneficiary will receive 2/3 of the lump sum up front, and the remaining 1/3 will be paid over time B. The beneficiary will receive 2/3 of the total benefit, with the final 1/3 payable when the first beneficiary dies C. One of the beneficiaries will receive 1/3 and the other 2/3 of the proceeds when the insured dies D. The surviving beneficiary will continue receiving 2/3 of the benefit paid when both beneficiaries were alive

D. The surviving beneficiary will continue receiving 2/3 of the benefit paid when both beneficiaries were alive

Which rider, when attached to a permanent life insurance policy, provides an amount of insurances on every family member? A. Spouse rider B. Children's rider C. Additional insured rider D. Family term rider

D. Family term rider

If a settlement option is not chosen by the beneficiary or policyowner, which option will be used? A. Fixed period B. Fixed amount C. Lump sum D. Life income

C. Lump sum

An insured and his wife are both involved in a head-on collision. The husband died instantly and the wife dies 15 days later. The company pays the death benefit to the estate of the insured. This indicates that the life insurance policy had what provision? A. Second-to-Die B. Common Disaster C. Accidental Death D. Survivor Life

B. Common Disaster

In a case where the primary beneficiary predeceases the insured, in the event of the insured's death, the death benefit proceeds will be paid to: A. The insurance company B. The contingent beneficiary C. The insured's spouse D. The policyowner

B. The contingent beneficiary

Which nonforfeiture option provides coverage for the longest period of time? A. Extended term B. Paid-up option C. Accumulated at interest D. Reduced paid-up

D. Reduced paid-up

A policyowner who is also the insured wants to name her husband as the beneficiary of her life policy. She also wishes to retain all of the rights of ownership. The policyowner shave have her husband named as the A. Revocable beneficiary B. Secondary beneficiary C. Contingent beneficiary D. Irrevocable beneficiary

A. Revocable beneficiary

What is the other term for the cash payment settlement option? A. Principal amount B. Face amount C. Proceeds D. Lump sum

D. Lump sum

Which of the following is TRUE about the 10-day free-look period in a Life Insurance policy? A. It is optional on all life insurance policies B. It begins when the policy is delivered C. It begins when the application is signed D. It applies only to term life insurance policies

B. It begins when the policy is delivered

Children's riders attached to whole life policies are usually issued as what type of insurance? A. Adjustable life B. Whole life C. Term D. Variable life

C. Term

According to the entire contract provision, what document must be made part of the insurance policy? A. Buyer's Guide B. Agent's report C. Outline of coverage D. Copy of the original application

D. Copy of the original application

Which nonforfeiture option has the highest amount of insurance protection? A. Extended Term B. Conversion C. Decreasing Term D. Reduced Paid-up

A. Extended Term

An insured has a life insurance policy from a participating company and receives quarterly dividends. He has instructed the company to apply the policy dividends to increase the death benefit. The dividend option that the insured has chosen is called A. Paid-up additions B. One-year term purchase C. Accumulation at interest D. Reduction of premiums

A. Paid-up additions

An insured has had a life insurance policy that he purchased 3 years ago when he was 40 years old. He is killed in an automobile accident and it is discovered that he is actually 45 years old, and not 43, as stated on the application. What will the company do? A. Pay the full death benefit and refund excess premium B. Pay a reduced death benefit C. Pay the full death benefit D. Pay nothing; there was a misrepresentation on the application

B. Pay a reduced death benefit

When an insured under a life insurance policy died, the designated beneficiary received the face amount of the policy as well as a refund of all the premiums paid. Which rider is attached the policy? A. Decreasing term B. Premature death C. Return of premium D. Cost of living

C. Return of premium

Which of the following best describes fixed-period settlement option? A. Only the principal amount will be paid out within a specified period of time B. The death benefit must be paid out in a lump sum within a certain period time period C. Income is guaranteed for the life of the beneficiary D. Both the principal and interest will be liquidated over a selected period of time

D. Both the principal and interest will be liquidated over a selected period of time

Which of the following statements is TRUE concerning the Accidental Death Rider? A. It is known as a triple indemnity rider B. This rider is only available to insureds over the age of 65 C. It is only available in group insurance D. It will pay double or triple the face amount

D. It will pay double or triple the face amount

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. Automatic premium loan

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. Interest only B. Fixed period C. Life with period certain D. Fixed amount

B. Fixed period

A 40 year old man buys a whole life policy and names his wife as his only beneficiary. His wife dies 10 years later. He never remarries and dies at age 61, leaving 2 grown-up children. Assuming he never changed the beneficiary, the policy proceeds will go to A. The insurance company B. The insured's estate C. The insured's firstborn child D. Both children who share equally on a per-capita basis

B. The insured's estate

If an insured continually uses the automatic premium loan option to pay the policy premium A. The insurer will increase the premium amount B. The policy will terminate when the cash value is reduced to nothing C. The face amount of the policy will be reduced by the automatic premium loan amount D. The cash value will continue to increase

B. The policy will terminate when the cash value is reduced to nothing

A rider that may be attached to a life insurance policy that will adjust the face amount based upon a specific index, such as the Consumer Price Index, is called A. Accelerated benefit rider B. Living need rider C. Pay or rider D. Cost off living rider

D. Cost of living rider

A father purchases a life insurance policy on his teenage daughter and adds the Payor Benefit rider. In which of the following scenarios will the rider waive the payment of premium? A. If the father is disabled for at least a year B. If the daughter is disabled for more than 3 months C. If the daughter is disabled for any length of time D. If the father is disabled for more than 6 months

D. If the father is disabled for more than 6 months

An insured has a continuous premium whole life policy. She would like to use the policy dividends to pay off her policy sooner than would have been possible otherwise. What dividend option could she use? A. Paid-up option B. One-year term C. Reduction of premium D. Accumulation at interest

A. Paid-up option

The paid-up addition option uses the dividend A. To purchase a one-year term insurance in the amount of cash value B. To reduce the next year's premium C. To accumulate additional savings for retirement D. To purchase a smaller amount of the same type of insurance as the original policy

D. To purchase a smaller amount of the same type of insurance as the original policy

An insured purchased a 15-year level term life insurance policy with a face amount of $100,000. The policy contained an accidental death rider, offering a double indemnity benefit. The insured was severely injured in an auto accident, and after 10 weeks of hospitalization, died from the injuries. What amount would his beneficiary receive as a settlement? A. $0 B. $100,000 C. $200,000 D. $100,000 plus the total of paid premiums

C. $200,000

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 A. Revocable designation B. Irrevocable designation C. Stirpes designation D. Class designation

C. Class designation

Upon the death of the insured, the primary beneficiary discovers that the insured chose the interest only settlement option. What does this mean? A. The beneficiary will receive the lump sum, plus interest B. The primary beneficiary will receive the death benefit and the secondary beneficiaries will share the interest payments C. The beneficiary will only receive payments of the interest earned on the death benefit D. The beneficiary must pay interest to the insurer

C. The beneficiary will only receive payments of the interest earned on the death benefit

Methods used to pay the death benefits to a beneficiary upon the insured's death are called A. Designation options B. Beneficiary provisions C. Death benefit options D. Settlement options

D. Settlement options

The insured had his wife named as the beneficiary of his life insurance policy. To ensure that his wife had income for life after the insured's death, he chose the life income settlement option. The amount of payments will be determined by taking into account all of the following EXCEPT A. The beneficiary's life expectancy B. Projected interest rates C. Face amount of the policy D. The insured's age at death

D. The insured's age at death

A couple owns a life insurance policy with a Children's Term rider. Their daughter is reaching the maximum age of dependent coverage so she will have to convert permanent insurance in the near future. Which of the following will she need to provide for proof of insurability? A. Medical exam and parents' medical history B. Proof of insurability is not required C. Medical exam D. Her parents' federal income tax receipts

B. Proof of insurability is not required

A father owns a life insurance policy on his 15-year old daughter. The policy contains the optional Payor Benefit rider. If the father becomes disabled, what will happen to the life insurance premiums? A. The insured will have to pay the premiums for 6 months. If at the end of this period the father is still disabled, the insured will be refunded the premiums B. The insured's premiums will be waived until she is 21 C. The premiums will become tax deductible until the insured's 18th birthday D. Since the policyowner, and not the insured, who has become disabled, the life insurance policy will not be affected

B. The insured's premiums will be waived until she is 21

What type of insurance would be used for a Return of Premium rider? A. Decreasing Term B. Annually Renewable Term C. Increasing Term D. Level Term

C. Increasing Term

The paid-up addition option uses the dividend A. To purchase a one-year term insurance in the amount of the cash value B. To reduced the next year's premium C. To accumulate additional savings for retirement D. To purchase a smaller amount of the same type of insurance as the original policy

D. To purchase a smaller amount of the same type of insurance as the original policy

The Waiver of Cost of Insurance rider is found in what type of insurance? A. Whole Life B. Joint and Survivor C. Juvenile Life D. Universal Life

D. Universal Life

The rider in a whole life policy that allows the company to forgo collecting the premium if the insured is disabled is called A. Guaranteed insurability B. Waiver of cost of insurance C. Payor benefit D. Waiver of premium

D. Waiver of premium