Life policy Provisions, Riders and Options

How many premiums are used for children's term riders A. 1 B. Depending on how many kids C. 2 D. 3

A. 1 - one premium for all children

How long is the free look period A. 10 days from receipt of the policy B. 15 days from receipt of the policy C. 30 days from receipt of the policy D. 7 days from receipt of the policy

A. 10 days from receipt of the policy

If the insured and the primary beneficiary dies in a common disaster, it is presumed that the primary beneficiary died first so that the proceeds will be paid to whom? A. Either the contingent beneficiary or the insured estate (if no content beneficiary is designated) B. Only the contingent beneficiary C. Only the estate D. The beneficiary's children

A. Either the contingent beneficiary or the insured estate (if no content beneficiary is designated

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 they pick? A. Fixed Period B. Fixed Amounts C. Installment Only D. Life with period certain

A. Fixed Period

This is when a specified period of years is selected, and equal installments are paid to the recipient A. Fixed Period B. Fixed Amounts C. Installment Only D. Life with period certain

A. Fixed Period

In what instance would a waiver of premium be used for a policy A. If the insured becomes totally disabled B. If the insured becomes partially disabled C. If the insured loses their job D. If the insured

A. If the insured becomes totally disabled

If a policy has been in force for _____ years, even if there have been material misstatements of facts or concealment of material fact, then this is called what? A. 2 years B. 3 years C. 5 years D. 10 years A. Incontestability B. Instability C. Binding clause D. Binding effect

A. Incontestability A. 2 years

This rider provides coverage for one or more family members other than the insured. A. Other Insured Rider B. Children Rider C. Change of insured rider D. Insured Riders

A. Other Insured Rider

Which of the following riders would not cause the Death Benefit to increase? A. Payor Benefit Rider B. Guaranteed Insurability Rider C. Cost of living rider D. Accidental Death Rider

A. Payor Benefit Rider - it only pays the premium if the payor is disabled or dies

When a whole life policy lapses or is surrendered prior to maturity, the cash value can be used to: A. Purchase a single premium policy for a reduced face amount B. Purchase a term rider to attach to the policy C. Pa back all premiums owed plus interest D. Receive payments for a fixed amount

A. Purchase a single premium policy for a reduced face amount- Here, the cash value can be used by the insurer as a single premium to purchase completely paid up permanent policy that has a reduced face amount from that of the former policy

There are added to a policy for modifications attached to a policy that provide benefits not found in the original policy A. Riders B. Provisions C. Options

A. Riders

Which clause excludes all causes of death while the insured is on active duty in the military Which excludes the death benefit if the insured is killed in an act of war A. Status Clause B. Results Clause

A. Status Clause B. Results Clause

Which is not true about beneficiary designations? A. The beneficiary must have an insurable interest in the insured B. the beneficiary may be a natural person C. The policy owner does not have a beneficiary name in order to be valid D. Trusts can be valid beneficiaries

A. The beneficiary must have an insurable interest in the insured

The living needs riders provide for payment of the party of the policy death benefit if the insured is diagnosed with a terminal illness that will result in death within ____ years. A. 1 B. 2 C. 3 D. 4

B. 2

The guaranteed insurability rider allows the insured to purchase additional coverage at specified future dates. Usually every ____ years A. 2 B. 3 C. 4 D. 5

B. 3

How long can insurance companies defer a policy loan request unless the reason for the loan is to pay the policy premium? A. 3 months B. 6 months D. 1 year C. 1 month

B. 6 months

Under the Uniform Simultaneous Death Law, if the insured and the primary beneficiary died in the same accident, and there is no sufficient evidence to show who died first, then how are the policy proceeds are to be distributed? A. They aren't B. As if the primary beneficiary died first C. They go to the estate D. They go to the insurance company

B. As if the primary beneficiary died first

The substitute insured rider does not permit an additional insured but instead allows for what? A. To take out the change of person insured B. Change of insured C. Temporary change of insured D. Temporary change of person insured

B. Change of insured

This is when specified amounts in installments until the proceeds (Principal and interest) are exhausted A. Fixed Period B. Fixed Amounts C. Installment Only D. Life with period certain

B. Fixed Amounts

With the guaranteed insurability Rider, if an insured person decides that they need to buy additional insurance coverage, then what will happen to the premium? A. It will decrease because he is buying more B. It will increase based on the attained age C. It will stay the same C. It will decrease because he has a family now

B. It will increase based on the attained age

Which of the following riders added, to a life insurance policy can pay part of the death benefit to the insured to cover expenses incurred in a nursing or convalescent home? A. Payor benefit B. Long-term care C. Accidental death D. Guaranteed Insurability

B. Long-term care

This is a characteristic of an insurance contract that is fairly universal from one policy to the next A. Riders B. Provisions C. Options

B. Provisions

Which of the following, when attached to a permanent life insurance policy, allows the policy owner to customize the policy to provide an additional amount of temporary insurance on the insured or allows the amount of temporary insurance to cover other family members? A. Change of insured rider B. Term Rider C. Accidental death and dismemberment of rider D. Guaranteed insurability rider

B. Term Rider

If there are no beneficiaries are alive a the time of the insured's death, or if no beneficiaries have been named, then who will get the proceeds of the life insurance policy A. The beneficiary's kids B. The insured's estate C. The SEC D. It will go to charity

B. The insured's estate

What is the dollar amount limit for accelerated death benefits: A. 50,000 B. 150,000 C. 100,000 D. 200,000

C. 100,000

If the insured commits suicide within ___ years following the policy effective date, the insurer's liability is limited to a refund of the premium. A. 1 year B. 3 years C. 2 years D. 4 years

C. 2 years

What is the max time limit for reinstatement after the policy has lapsed? A. 1 year B. 2 years C. 3 years D. 5 years

C. 3 years

Which rider addresses the inflation factor by automatically increasing the amount of insurance without evidence of insurability from the insured? A. Payor benefit B. Long-term care C. Cost of living D. Guaranteed Insurability

C. Cost of living

All of the following are exclusions in life insurance policies except: A. Aviation B. Hazardous Occupations or Hobbies C. Food Related D. War or military

C. Food Related

An individual is purchasing a permanent life insurance policy with a face value of $250,000. While this is all the insurance that he can afford at the time, he wants to be sure that additional coverage will be available in the future. Which of the following options should be included in the policy? A. Guaranteed renewable option B. Nonforfeiture options C. Guaranteed insurability options D. Dividends options

C. Guaranteed insurability options

An insured purchased a life insurance policy on his life naming his wife as the primary beneficiary and his daughter as a contingent beneficiary. Under what circumstances could the daughter collect the death benefit? A. With the primary beneficiary written consent B. If the insured died from accidental means C. If the primary beneficiary predeceased the insured D. When the insured dies, the primary and contingent beneficiaries share death benefits equally.

C. If the primary beneficiary predeceased the insured - the daughter as contingent beneficiary would need to outlive the insured and primary beneficiary

These offer insurers and insured ways to invest or distribute a sum of money available in a life policy. . Riders B. Provisions C. Options

C. Options

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

C. Payor Benefits

Ownership provisions entities the policy owner to do all of the following except: A. Designate a beneficiary B. Receive a policy loan C. Set premium rates D. Assign the policy

C. Set premium rates- these are based upon underwriting considerations

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

C. Term - children's term riders provide term insurance with coverage expiring when the minor reaches a certain age

Who has the ownership rights under the insurance policy? A. Insured B. Beneficiary C. Policyowner

C. policy owner - the policy owner and insured may be the same person or different persons. But they hold the ownership rights under the policy

How long is the grace period for policy owners to pay the premiums before the policy lapses A. 10 days B. 25 days C. 5 days D. 30 days

D. 30 days or 31 days

How long do insurers impose a waiting period from the time of disability until the first premium is waived? A. 1 year B. 2 years C. 3 months D. 6 months

D. 6 months

Rob gets in an accident that puts him disabled for eight months. How long does he have to pay his premium until he can get a waiver of premium rider? A. 3 months B. 2 months C. 1 month D. 6 months

D. 6 months - after the six months, he will get refunded the premium of 6 months and have the waiver rider as well

At what age does accidental death riders expire? A. 90 B. 80 C. 62 D. 65

D. 65

With accidental death riders, death must usually occur within how many days of such an accident? A. 10 B. 60 C. 30 D. 90

D. 90

True or false: If a policy owner elects to reinstate the policy, then they do not have to provide evidence of insurability because the insurer has all the previous information

False - they still need to provide proof of insurability

True or false: The monthly premium charge will be less than the annual premium cost when comparing the two.

False - when opting into a monthly premium option, there are admin charges and lost of interest charges that must be added to the monthly premium charge. An annual premium cost for a whole life policy could be 1200, while for a monthly one it could end up costing 1320 because of those extra charges

Entire Contract = _______ + _________+___________

Policy copy of application any riders or amendments

Common Disaster clause protects whom? A. Primary beneficiary B. Contingent beneficiary C. Insurer D. Insured

The contingent beneficiary If mike and his wife were in a car accident and he died immediately, and then his wife dies four days after and their son was the contingent beneficiary then the policy would pay out to him

Explain automatic premium loan Does this loan charge interest? If the interest and loan is not repaid and insured dies what happens

This is a loan that is against the policy cash value for the amount of premium due that is generated by the insurer when the policy owner has not paid the premium by the end of the premium-paying grace period yes it will be subtracted from death benefit

True or false: Policy loans are ONLY available in policies that cash value (whole life)

True

True or false: A policy owner can simply surrender the policy for the current cash value at a time when coverage is no longer needed or affordable. IF cash value exceeds premiums paid, the excess is taxable as ordinary income When they do surrender the policy they must also pay a surrender charge

True true true

This assignment is the complete and permanent transfer of ownership rights

absolute assignment

When the insured selects the extended term nonforfeiture option, the cash value will be used to purchase term insurance with what face amount. A. Equal to the cash value surrendered from the policy B. The same as the original policy minus cash value C. Equal to the original policy for as long as the cash value will purchase D. In lesser amounts for the remaining policy term of age

c - the cash value is used as a single premium to purchase the same face amount as the original policy for as long a period of time as the cash will buy at the current insured age

What is use to purchase a single premium policy in addition to the face amount of the permanent policy The single premium payments will do what to the death benefit

dividends increase

True or false: Insurance companies always guarantee dividends

false

True or false: Policy loans are subject to income taxation

false

True or false: The dividends are taxable while the interest on the dividends are not taxable

false - dividends are not taxable while interest is taxable

True or false: The policy owner of a life insurance policy has the rights to transfer partial or complete ownership of the policy to another person but only with the consent of the insurer

false - they don't need consent

The policy owner must notify the insurer in writing that they are transferring partial or complete ownership of the policy

true

True or false: IN an absolute assignment the new policy owner does not need to have an insurable interest in the insured

true

True or false: Misstatements of age on an application will result in an adjustment of premiums or benefits.

true

True or false: in children's terms rider, adopted, or stepchildren can be added to coverage for a limited period of time for a specified amount

true

True or false: in an irrevocable designation of a beneficiary, the designation may not be changed without the written consent of the beneficiary. In addition to being irrevocably able to change beneficiaries, the policy owner also cannot borrower against the policy's cash value

true true

True or false: If an insured becomes totally disabled and they are able to return to work, then coverage will remain in place If the insured is never able to return to work, the premiums will continue to be waiver by the insurance company

true true

If Joe has a term life policy with a benefit of 50k and a premium of 50 a month, that is due at the first of every month. Say joe forgets to pay one month and dies on the 15th, will the beneficiary still get the death benefit?

ye,s but they will deduct the premiums of $50.00 from the $50k