Policy provisions

Alice G., age 65, purchased an ordinary whole life policy at the age of 63. She is a resident of Florida. The grace period for her policy is how many days?

51 days

Which of the following statements about policy loans is NOT correct?

A policy loan is only available after premiums have been paid for at least 10 years

The rights in or to a policy may be transferred to another party. Regardless of purpose, all assignments are classified as

Absolute or Collateral

Which provision would provide for the early payment of some portion of the policy face amount should the insured suffer from a terminal illness or injury?

Accelerated Benefits Provision

Which of the following statements pertaining to the Accelerated Benefits Provision is CORRECT?

Accelerated benefits provisions are standard in life insurance policies

A rider attached to a life insurance policy which provides for payment of a multiple of the face value for death from a specified cause is called which of the following?

Accidental Death Benefit Rider

Concerning the Waiver of Premium Rider, which of the following statements is CORRECT?

All premiums are waived during a period of total and permanent disability prior to reaching a specified age

Third-party ownership of a life insurance contract is usually the result of

An absolute assignment

What is the name of the provision in a life insurance policy that may prevent a policy from lapsing?

Automatic Premium Loan provision

Most life insurance policies contain restrictions that exclude from coverage certain types of risks. Which of the following would NOT be a common exclusion?

Death resulting from murder

Which of the following statements about dividend payments under a participating policy is INCORRECT?

Dividend payments are taxable income

Which clause of a life insurance policy states that the application is a part of the contract?

Entire Contract provision

The incontestable clause would apply in which of the following situations?

Fraud

Regarding the Misstatement of Age provision, which of the following statements is TRUE?

If the insured's age has been understated, it provides that a death benefit smaller than the face amount of the policy will be payable

Which of the following is a policy clause typically found on the face page of a life insurance policy?

Insuring Clause

Which of the following statements regarding life insurance premiums is NOT correct?

Interest is charged on all unpaid premiums during the grace period

Concerning the Guaranteed Insurability Rider, which of the following is CORRECT?

It allows for the purchase of additional insurance at standard premium rates

Which of the following statements are NOT applicable to the insuring clause found on the cover of a life insurance policy?

It defines losses not covered by the policy

Which one of the following statements concerning the insuring clause is INCORRECT?

It lists the exclusions for which benefits will not be paid

Which of the following statements regarding exclusions in life insurance policies is CORRECT?

Most policies contain restrictions that exclude from coverage certain types of risks

Which of the following statements about "reinstatement" is CORRECT?

New contestable period usually goes into effect

Which of the following statements regarding nonforfeiture values is FALSE

Nonforfeiture values are present in all forms of life insurance

Which of the following dividend options permits the policyowner to leave dividends with the life insurance company without incurring a taxable income responsibility?

Paid-up Additions

Which of the following requirements MUST be met to reinstate a policy after it has lapsed for nonpayment of premium?

Payment of all overdue premiums

A Payor Provision typically waives premiums on a juvenile policy if the:

Person who pays the premium dies or becomes disabled before the insured child reaches a certain age

Which of the following statements concerning Extended Term Insurance is NOT correct?

Premiums payable on the term insurance are for a reduced amount

Which of the following statements best explains the purpose of the "Incontestable Clause"?

Prevents the insurer from denying a claim based on either statements contained in the application or on grounds of concealment

Which of the following is a nonforfeiture option that allows a cash value to continue to grow?

Reduced Paid-up

The clause in a life insurance contract that precludes payment of the face value for a specified cause of death during the initial years of the policy is the

Suicide Clause

Concerning the Guaranteed Insurability Rider, which of the following statements is CORRECT?

The common age range in which guaranteed insurability is available is from 25-40 in three-year intervals

Regarding the Guaranteed Insurability Rider, which of the following statements is INCORRECT?

The insured has 120 days in which to exercise an option to purchase (90)

According to the Suicide Clause in a life policy, which of the following is INCORRECT?

The period of exclusion is generally three to five years from the policy's issue date

Which of the following statements regarding assignments is NOT correct?

The policyowner must obtain approval from the insurance company before a policy can be assigned

Which of the following is NOT an ownership right under a life insurance policy?

The right to set premium rates and to determine the underwriting considerations

Ben stopped paying premium eight years ago. He never surrendered it. He is still insurable with no outstanding loan against him. The company will probably decline him because the time limit usually is

Three or seven years

All of the following life insurance contract provisions are required under state law EXCEPT

Waiver of Premium provision