Life Policy Provision, Riders and Options
All of the following are true regarding insurance policy loans EXCEPT A - The policy will terminate if the loan plus interest equals or exceeds the cash value of the policy. B - Policyowners can borrow up to the full amount of their whole life policy's cash value. C - Policy loans can be made on policies that do not accumulate cash value. D - The amount of the outstanding loan and interest will be deducted from the policy proceeds when the insured dies.
C
All of the following are true regarding the guaranteed insurability rider EXCEPT A - The insured may purchase additional insurance up to the amount specified in the base policy. B - It allows the insured to purchase additional amounts of insurance without proving insurability only at specified dates or events. C - This rider is available to all insureds with no additional premium. D - The insured may purchase additional coverage at the attained age.
C
The sole beneficiary of a life insurance policy dies before the insured. If the policyowner fails to change the beneficiary before the insured's death, the proceeds of the policy will go to A - The state. B - The beneficiary's estate. C - The insured's estate. D - Probate.
C
Which of the following applies to the 10-day free-look privilege? A - It can be waived only by the insurance company. B - It is granted only at the option of the agent. C - It permits the insured to return the policy for a full refund of premiums paid. D - It allows the insured 10 days to pay the initial premium.
C
Which of the following information will be stated in the consideration clause of a life insurance policy? A The time period allowed for the payment of premium B The conditions for insurability C The amount of premium payment D The parties to the contract
C
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
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 Irrevocable designation. B Stirpes designation. C Class designation. D Revocable designation.
C
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 - Waiver of premium B - Incontestability period C - Assignment D - Automatic premium loan
D
After a back injury, an insured is disabled for a year. His insurance policy carries a Disability Income Benefit rider. Which of the following benefits will he receive? A Percentage of medical costs paid by the insurer B Payments for life C Yearly premium waiver and income D Monthly premium waiver and monthly income
D
An insured committed suicide 6 months after his life insurance policy was issued. The insurer will A Pay the policy's cash value. B Pay the full death benefit to the beneficiary. C Pay nothing. D Refund the premiums paid.
D
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? A - Adjustable life B - Term life C - Limited pay D - Universal life
D
If an insured withdraws a portion of the face amount in the form of accelerated benefits because of a terminal illness, how will that affect the payable death benefit from the policy? A The death benefit will be forfeited. B The death benefit will be the same as the original face amount. C The death benefit will be larger. D The death benefit will be smaller.
D
If the policyowner, the insured, and the beneficiary under a life insurance policy are three different people, who has the ownership rights? A - The insured and the policyowner B - Beneficiary C - Insured D - Policyowner
D
Life income joint and survivor settlement option guarantees A - Payment of interest on death proceeds. B - Payout of the entire death benefit. C - Equal payments to all recipients. D - Income for 2 or more recipients until they die.
D
The automatic premium loan provision is activated at the end of the A Free-look period B Elimination period. C Policy period. D Grace period.
D
The owner of a life insurance policy wishes to name two beneficiaries for the policy proceeds. What will the soliciting insurance producer say? A - The way proceeds are split between beneficiaries is decided by which type of policy is chosen. B - Life insurance policies may have only one beneficiary. C - The proceeds will be split evenly between the two beneficiaries. D - The policyowner can specify the way proceeds are split in the policy.
D
What is the name of a clause that is included in a policy that limits or eliminates the death benefit if the insured dies as a result of war or while serving in the military? A Limited benefit B Aviation C Hazardous occupation D War or military service
D
What provision in an insurance policy extends coverage beyond the premium due date? A - Free look B - Automatic premium loan C - Waiver of premium D - Grace period
D
When a life insurance policy was issued, the policyowner designated a primary and a contingent beneficiary. Several years later, both the insured and the primary beneficiary died in the same car accident, and it was impossible to determine who died first. Which of the following would receive the death benefit? A The insurance company B The insured's estate C The primary beneficiary's estate D The insured's contingent beneficiary
D
When a whole life policy lapses or is surrendered prior to maturity, the cash value can be used to A - Purchase a term rider to attach to the policy. B - Pay back all premiums owed plus interest. C - Receive payments for a fixed amount. D - Purchase a single premium policy for a reduced face amount.
D
Which of the following explains the policyowner's right to change beneficiaries, choose options, and receive proceeds of a policy? A - The Entire Contract Provision B - The Consideration Clause C - Assignment Rights D - Owner's Rights
D
Which of the following is true about the premium on the children's rider in a life insurance policy? A - It decreases when the oldest child reaches the age of 21. B - It increases when a newborn baby is added to the policy. C - It decreases when an adopted child is added to the policy. D - It remains the same no matter how many children are added to the policy.
D
What is the clause that describes the method of paying the death benefit in the event that the insured and beneficiary are both killed in the same accident? A - Nonforfeiture Clause B - Common Disaster Clause C - Spendthrift Clause D - Settlement Clause
B
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 - If the primary beneficiary predeceased the insured B - When the insured dies, the primary and contingent beneficiaries share death benefits equally. C - With the primary beneficiary's written consent D - If the insured died from accidental means
A
What is the term for how frequently a policyowner is required to pay the policy premium? A - Mode B - Schedule C - Grace period D - Consideration
A
Which of the following statements is TRUE about a policy assignment? A It transfers rights of ownership from the owner to another person. B It is the same as a beneficiary designation. C It permits the beneficiary to designate the person to receive the benefits. D It authorizes an agent to modify the policy.
A
Who can request changes in premium payments, face value, loans, and policy plans? A Policyowner B Contingent beneficiary C Beneficiary D Producer
A
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
A business owner was trying to obtain a bank loan to fund the purchase of a new business facility, but the bank required proof of additional assets to secure the loan. The business owner then decided to use her $250,000 life insurance policy to secure the loan. Which provision makes this possible? A - Ownership provision B - Collateral assignment C - Insurable interest D - Modification clause
B
During partial withdrawal from a universal life policy, which portion will be taxed? A - Loan B - Interest C - Cash value D - Principal
B
Under an extended term nonforfeiture option, the policy cash value is converted to A - A higher face amount than the whole life policy. B - The same face amount as in the whole life policy. C - The face amount equal to the cash value. D - A lower face amount than the whole life policy.
B
Which of the following statements is TRUE concerning irrevocable beneficiaries? A - They may be changed at any time. B - They can never be changed. C - They may be changed only on the anniversary date of the policy. D - They can be changed only with the written consent of that beneficiary.
D
An insured has chosen joint and 2/3 survivor as the settlement option. What does this mean to the beneficiaries? A - One of the beneficiaries will receive 1/3 and the other 2/3 of the proceeds when the insured dies. B - The surviving beneficiary will continue receiving 2/3 of the benefit paid when both beneficiaries were alive. C - The beneficiary will receive 2/3 of the lump sum up front, and the remaining 1/3 will be paid over time. D - The beneficiary will receive 2/3 of the total benefit, with the final 1/3 payable when the first beneficiary dies.
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
What would be an advantage to naming a contingent (or secondary) beneficiary in a life insurance policy? A - It requires that someone who is not the primary beneficiary handles the estate. B - It determines who receives policy benefits if the primary beneficiary is deceased. C - It allows creditors to receive payment out of the proceeds. D - It ensures the policy proceeds will be split between the primary and contingent beneficiaries.
B
Which life insurance settlement option guarantees payments for the lifetime of the recipient, but also specifies a guaranteed period, during which, if the original recipient dies, the payments will continue to a designated beneficiary? A - Fixed-amount B - Life income with period certain C - Joint and survivor D - Single life
B
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
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 should have her husband named as the A - Contingent beneficiary. B - Irrevocable beneficiary. C - Revocable beneficiary. D - Secondary beneficiary.
C
All of the following are Nonforfeiture options EXCEPT A Extended term B Reduced paid-up C Interest only D Cash surrender
C
What type of account will most likely be established for a minor? A - Credit life B - Estate planning C - Trust D - Annuity
C