Life Policy Provisions, Riders, and Options

An insured misstates her age at the time the life insurance application is taken. This misstatement may result in

Adjustment in the amount of the death benefit

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

Cost of living rider

What happens when a policy is surrendered for its cash value?

Coverage ends and the policy cannot be reinstated

Which of the following is NOT typically excluded from life policies?

Death due to plane crash for a fare-paying passenger

Which rider, when attached to a permanent life insurance policy, provides an amount of insurance on every family member?

Family Term Rider

What provision in a life insurance policy extends coverage beyond the premium due date?

Grace period

The life insurance policy clause that prevents an insurance company from denying payment of a death claim after a specified period of time is known as the

Incontestability clause

What is the benefit of choosing extended term as a nonforfeiture option?

It has the highest amount of insurance protection

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 benefit

Which of the following riders would NOT cause the Death Benefit to increase?

Payor Benefit Rider

What nonforfeiture option provides coverage for the longest period of time?

Reduced paid-up

An insured pays $1,200 annually for her life insurance premium. The insured applies this year's $300 worth of accumulated dividends to the next year's premium, thus reducing it to $900. What option does this describe?

Reduction of Premium

Children's riders attached to whole life policies are usually issued as what type of insurance?

Term

What happens to a policy's cash value under an extended term nonforfeiture option?

The cash value is converted to the same face amount as in the whole life policy

Under an extended term nonforfeiture option, the policy cash value is converted to

The same face amount as in the whole life policy

An absolute assignment is a

Transfer of all ownership rights in a policy

An individual is purchasing a permanent life insurance policy with a face value of $25,000. While this is all the insurance that he can afford at this 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?

Guaranteed insurability option

The policy owner 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 policy owner choose?

Interest only option

When a reduced paid-up nonforfeiture option is chose, 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

What is the purpose of the Automatic Premium Loan provision?

To prevent the unintentional lapse of a policy because of nonpayment of the premium