Life provisions

K pays on a $20,000 20-Year Endowment policy for 10 years and dies from an automobile accident. How much will the insurance company pay the beneficiary?

$20,000 death benefit

P purchases a $50,000 term life insurance policy in 2005. One of the questions on the application ask if P engages in scuba diving, to which P answers "No". The policy is then issued with no scuba exclusions. In 2010, P takes up scuba diving and dies in a scuba-related accident in 2011. What will the insurer pay to P's beneficiary?

$50,000 minus any outstanding policy loans

A potential client, age 40, would like to purchase a Whole Life policy that will accumulate cash value at a faster rate in the early years of the policy. Which of these statements made by the producer would be correct?

20-Pay Life accumulates cash value faster than Straight Life

Which of the following dividend options results in taxable income to the policyowner?

Accumulation at interest

What does the insuring agreement in a life insurance contract establish?

An insurer's basic promise

N is covered by a Term Life policy and does not make the required premium payment which was due August 1. N dies September 15. What action will the insurer take?

Claim will be denied

What provision in a life insurance policy states that the application is considered part of the contract?

Entire Contract provision

An insured is past due on his life insurance premium, but is still within the Grace Period. What will the beneficiary receive if the insured dies during this Grace Period?

Full face amount minus any past due premiums

All of these statements about the Waiver of Premium provision are correct EXCEPT

Insured must be eligible for Social Security disability for claim to be accepted

The agreement in a life insurance contract that states a specific sum of money will be paid to a designated person upon an insured's death is called a(n)

Insuring agreement

In a life insurance contract, an insurance company's promise to pay stated benefits is called the:

Insuring clause

How are policyowner dividends treated in regards to income tax?

Interest on accumulations is taxed

Which of the following statements about accumulated interest earned on dividends from an insurance policy is true?

It is taxed as ordinary income

All of these statements concerning settlement options are true, except

Only the beneficiary may select

In a life insurance policy, which provision states who may select policy options, designate and name a beneficiary, and be the recipient of any financial benefits from the policy?

Owner's Rights

M had an annual life insurance premium payment due January 1. She died January 10 without making the premium payment. What action will the insurer take?

Pay face amount minus the past due premium

The provision that can be used to put an insurance policy back in force after it has lapsed due to nonpayment is called:

Reinstatement

J let her life insurance policy lapse 8 months ago due to nonpayment. She can reestablish coverage under which of the following provisions?

Reinstatement provision

D was actively serving in the Marines when he was killed in an automobile accident while on leave. His $100,000 Whole life policy contains a War Exclusion clause. How much will D's beneficiary's receive?

The full face amount

Which type of life policy contains a monthly mortality charge as well as self-directed investment choices?

Variable Universal Life

When a misrepresentation on a life insurance policy application is discovered, what action may an insurance company take?

Void the policy only if it is discovered during the Contestable period and proven to be material

A return of premium life insurance policy is:

Whole life and Increasing term

What action will an insurer take if an interest payment on a policy loan is not made on time?

automatically add the amount of interest due to the loan balance

The automatic premium loan provision is designed to:

avoid a policy lapse

Whose life is covered on a life insurance policy that contains a payor benefit clause?

child

Which of these actions is taken when a policyowner uses a life insurance policy as collateral for a bank loan?

collateral assignment

Additional coverage can be added to a Whole Life policy by adding a(n)

decreasing term rider

When an insurer issues a policy that refuses to cover certain risks, this is referred to as a(n)

exclusion

An insured's inability to perform two or more activities of daily living may trigger which type of policy rider?

long term care

Which life insurance rider typically appears on a Juvenile life insurance policy?

payor benefit rider