PSI 14: life insurance policy provisions, options, & riders 8-9
a cash dividend is usually paid on what schedule?
annually
accumulation at interest is an example of which provision
dividend option
what is the purpose of a life insurance policy's non-forfeiture options?
to protect the policy owner's coverage and/or cash value when the policy is lapsed or surrendered
the selection of which life insurance policy rider will NEVER result in a larger death benefit than the original face amount?
waiver of premium rider
Wyatt owns a universal life policy with an annual minimum premium of $1,200 and an annual target premium of $1,500. For the last 3 years, Wyatt has paid the target premium. If he has a Waiver of Premium Rider and becomes disabled, how much will the rider pay for his policy?
$1,500 each year
life insurance policy dividends are
a return of premium overcharge
Mallory is a producer appointed by a stock company when she sells a whole life policy to Harry. In this situation, Mallory would not be under any obligation to explain what to Harry?
accumulate at interest
the use of which dividend option would create a taxable event?
accumulate at interest
which dividend option triggers an income tax obligation?
accumulate at interest
Paul and John are equal partners in their business which is worth $500,000. They wish to assure that the business will continue in the event of the death of either partner. Which funding arrangement best suits their objective?
each partner purchases a $250,000 policy on the other partner
The feature of a Life Insurance Policy stating that the policy will NOT cover certain risks is known as
exclusion
a dividend paid to a policy owner by a mutual insurance company is
not taxable
which dividend option allows the insured to purchase more benefits and is calculated at the attained age?
one year term
which is the best option if an insured wants to pay off the policy early?
paid up insurance
Frank purchased a $100,000 Life Paid at 65 policy from a mutual insurance company. At age 65, he discovered that he had $135,000 of paid-up life insurance. Which dividend option did he utilize?
paid-up additions
which is the automatic dividend option?
paid-up additions
a juvenile life policy would likely be modified by which rider?
payor benefit
the selection of which life insurance policy rider CANNOT result in an increase in the policy's death benefit?
payor benefit
which of the following provides for the continuance of life insurance coverage on a juvenile in the event of the death or total disability of the individual responsible for the payment of the premiums?
payor clause
which statement concerning universal life is FALSE?
premiums must be paid on a monthly basis
if the declared dividend equals or exceeds the premium, the payment may be suspended. This is an example of which dividend option?
reduction of premium
which statement about the paid-up addition option is TRUE?
the amount of additional coverage is based on the insured's attained age
which does NOT trigger the payment of an accelerated death benefit?
the insured is permanently and totally disabled
