Policy Provisions, Riders, Options, and Exclusions
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
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 the beneficiary select?
Fixed Income
which of the following riders would not cause the death benefit to increase?
Payor benefit rider
The policyowner pays for her life insurance annually. Until now, she has collected a nontaxable dividend check each year. She has decided that she would rather use the dividends to help pay for her next premium. What option would allow her to do this?
Reduction of Premium
The ownership provision entitles the policy owner to do all of the following except
Set Premium Rates
If a policy has an automatic premium loan provision, what happens if the insured dies before the loan is paid back
The balance of the loan will be taken out of the death benefit
IF a life insurance policy has an irrevocable beneficiary designation,
The beneficiary can only be changed with written permission of the beneficiary
A long stretch of national economic hardship causes a 7% rate of inflation. A policyowner notices that the face value of her life insurance policy has been raised 7% as a result. Which policy rider caused this change?
Cost of Living rider
When a reduced-paid up nonforfeiture option is chosen, what happens to the face amount of the policy?
It is reduced to the amount of what cash value would buy as a single premium
If a settlement option is not chosen by the beneficiary or the policyowner, which option will be used?
Lump sum
Under an extended term nonforgeiture option, the policy cash value is converted to
The same face amount as in the whole life policy
When a life insurance policy is cancelled and the insured has selected the extended term nonforfeiture option, the cash value will be used to purchase term insurance that has a face amount
Equal to the original policy for as long a period of time that the cash values will increase
Which of the following protects the insured from an unintentional policy lapse due to a nonpayment of premium?
Automatic premium loan
At the time the insured purchased her life insurance policy, she added a rider that will allow her to purchase additional insurance in the future without having to prove insurability. This rider is called
Guaranteed insurability
An insured has a continuous premium whole life policy. she would like to use the policy dividends to pay off her policy sooner than would have been possible otherwise. What dividend option could she use?
Paid-up option
Which of the following determines the length of time that benefits will be received under the fixed-amount settlement option?
size of each installment
Which option is being utilized when the insurer accumulates dividends at interest and then uses the accumulated dividends, plus interest, and the policy cash value to pay the policy up early
Paid-up option
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
A life insurance policy does not have a war clause. if the insured is killed during a time of war, what will the beneficiary receive from the policy?
The full death benefit
which is true about a spouse term rider?
the rider is usually level term insurance
