POL California Life: Individual Life Insurance Contract - Provisions and Options

What limits the amount that a policy owner may borrow from a whole life insurance policy?

Cash value

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?

If the primary beneficiary predeceases the insured.

Using a class designation for beneficiaries means...

Naming beneficiaries as a group

Which of the following methods to designate a beneficiary literally means "by the head"?

Per capita

What type of beneficiary designation allows the benefit to pass from a deceased primary beneficiary to the beneficiary's heirs, instead of splitting the benefit among surviving primary beneficiaries?

Per stripes

Who has the legal title of the property in a trust?

Trustee

An insured pays an annual premium to his insurer. In return, the insurer promises to pay benefits in accordance with the terms of the contract. This is called...

Consideration

The provision which states that both the policy and a copy of the application form the contract between the policy-owner and the insurer is called the...

Entire contract

J applied for a life insurance policy on January 10. The policy was issued on January 31. J's agent was vacationing at the time the policy was issued, so J did not receive the policy until February 18. J decided that he does not want the policy. When would J need to return the policy to the insurer in order to receive a full refund of premium paid?

February 28th, or 10 days after the time the policy is delivered.

Which of the following is TRUE about mandatory 10-day free-look period in a Life Insurance policy?

It begins when the policy is delivered

An insured wants to change from an annual premium mode to a monthly premium mode. Which of the following is true?

The change can only be made on the policy's anniversary

When a life insurance policy was issued, the policy owner 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?

The insured's contingent beneficiary

The sole beneficiary of a life insurance policy dies before the insured. If the policy-owner fails to change the beneficiary before the insured's death, the proceeds of the policy will go to...

The insured's estate.

Which two terms are associated directly with the premium?

Level or flexible

An insured committed suicide one year after his life insurance policy was issued. The insurer will...

Refund the premiums paid

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

Adjustment in the amount of death benefit.

According to the entire contract provision, what document must be made part of the insurance policy?

Copy of the original application

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

Death due to plane crash for a fare-paying passenger

How does an insured typically decide which settlement option to choose for his/her beneficiary?

He/she typically decides by determining if the beneficiary will need one payment or a "steady stream" of income.

Which of the following policy components contains the company's promise to pay?

Insuring clause

What would be an advantage to naming a contingent (or secondary) beneficiary in a life insurance policy?

It determines who receives policy benefits if the primary beneficiary is deceased.

All of the following are true regarding insurance policy loans EXCEPT...

Policy loans can be made on policies that do not accumulate cash value.

Which of the following information will be stated in the consideration clause of a life insurance policy?

The amount of premium payment

if a life insurance policy has an irrevocable beneficiary designation,

The beneficiary can only be changed with written permission of the beneficiary.

Which is NOT true about beneficiary designations?

The beneficiary must have insurable interest in the insured.

In a case where the primary beneficiary proceeds the insured, in the event of the insured's death, the death benefit proceeds will be paid to...

The contingent beneficiary

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...

The insured's estate

Which of the following is TRUE about nonforfeiture values?

They are required by state law to be included in the policy.

Which of the following statements is TRUE concerning irrevocable beneficiaries?

They can be changed only with the written consent of that beneficiary.

The two types of assignments are...

Absolute and collateral.

A policy owner fails to pay the premium doe on his whole life policy after the grace period passes, but the policy remains in force. This is due to what provision?

Automatic premium loan

When a policy owner designates a group of individuals as the beneficiary of a life insurance death benefit without specifically naming the individuals, this is called...

Class designation

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

Which of the following applies to the 10-day free-look privilege?

It permits the insured to return the policy for a full refund of premiums paid

Which type of beneficiary is changeable at any point?

Revocable

All of hte following are beneficiary designations EXCEPT...

Specified Tertiary Contingent Primary

An absolute assignment is ...

Transfer of all ownership in a policy

What is the advantage of reinstating a policy instead of applying for a new one?

The original age is used for premium determination

If an insured continually uses the automatic premium loan option to pay the policy premium,

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

An insured stops making payments on a loan taken from his cash value policy. What will most likely happen?

The policy will terminate when the loan amount with interest equals or exceeds the cash value

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?

Collateral assignment

An insured and his wife were both involved in a head-on-collision. The husband dies 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 has what provision?

Common Disaster

Which of the following explains the policy-owner's right to change beneficiaries, choose options, and receive proceeds of a policy?

Owner's Rights

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?

Pay a reduced death benefit

An insured purchases a policy in 2008 and died in 2013. The insurance company discovers at that time that the insured concealed information during the application process. What can they do?

Pay the death benefit

The Ownership provision entitles the policy owner to do all of the following EXCEPT...

Set premium rates

An individual borrowed money at the bank to send his daughter to college. Instead of purchasing Credit Life insurance, he used an existing life insurance policy to secure the debt. This would be called a/an...

Collateral Assignment

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?

Military service or war

A policy-owner who is also the insured wants to name her husband as the beneficiary of her life policy. She also wished to retain all of the rights of ownership. The policy-owner should have her husband named as the...

Revocable beneficiary

The clause the protects the proceeds of a life insurance policy from creditors after the death of the insured is known as the..

Spendthrift clause

Which of the following statements about suicide clause in a life insurance policy is TRUE?

Suicide is excluded for a specific period of years and covered thereafter

The owner of a life insurance policy wishes to name two beneficiaries for the police proceeds. What will the soliciting insurance producer say?

The policy-owner can specify the way proceeds are split in the policy.

Which of the following statements is TRUE about a policy assignment?

It transfers rights of ownership from the owner to another person.

If the policy-owner, the insured, and the beneficiary under a life insurance policy are three different people, who has the ownership rights?

Policy-owner

An insured had a $10,000 term life policy. The annual premium of $200 was due on February 1; however, the insured failed to pay the premium. He died on February 28. How much would the beneficiary receive from the policy?

$9,800

According to the Entire Contract provision, a policy must contain...

A copy of the original application for insurance.

Naming a "trust" as the beneficiary of a life insurance policy can accomplish all of the following for the policy-owner, EXCEPT...

Allow the trustee to transfer the assets of the trust to their personal account.

An insured will be allowed to reactivate her lapsed life insurance policy if action is taken with a certain period of time, and proof of insurability is provided. Which policy provision allows this?

Reinstatement provision

When a life insurance policy stipulates that the beneficiary will receive payments in specified installments or for a specified number of years, what provision prevents the beneficiary from changing or borrowing from the planned installments?

Spendthrift provision

In a case where the primary beneficiary predeceases the insured, in the event of the insured's death benefit proceeds will be paid to...

The contingent beneficiary

What is a major problem with naming a trust as the beneficiary of a life insurance policy?

They are expensive to administer

What is the purpose of a suicide provision within a life insurance policy?

To protect the insurer from persons who purchase life insurance with the intention of committing suicide

California law requires an insurance company's dividends be credited...

Tp participating policies on the anniversary date of the policy provided all premiums are current.

The automatic premium loan provision is activated at the end of the...

Grace period

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

Grace period

What required provision protects against unintentional lapse of the policy?

Grace period

Which of the following is true regarding the spendthrift clause in life insurance policies?

It can protect the policy proceeds from creditors of the beneficiary

Which of the following applies to the 10-day free-look privilege?

It permits the insured to return the policy for a full refund of premiums paid.

Which of the following statements about the reinstatement provision is true?

It requires the policy-owner to pay all overdue premiums with interest before the policy is reinstated