Texas Life and Health: Life Policy Riders, provisions, Options and Exclusions

The rider in a whole life policy that allows the company to forgo collecting the premium if the insured is disabled is called

Waiver of premium

An individual is purchasing a permanent life insurance policy with a face value of $25,000. While this is all the insurance that he can afford at this time, he wants to be sure that additional coverage will be available in the future. Which of the following options should be included in the policy?

guaranteed insurability option

Which of the following would be deducted from the death benefit paid to a beneficiary, if partial accelerated death benefit had been paid while the insured was still alive?

Amount paid with the accelerated benefit, plus the earnings lost by the insurance company in interest income from the accelerated benefit

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

Copy of the original application

What happens when a policy is surrendered for its cash value?

Coverage ends and the policy cannot be reinstated

The Ownership provision entitles the policyowner to do all of the following EXCEPT

Set premmium rates - the insurer sets premium rates based upon underwriting considerations

Which of the following riders is often used in business life insurance policies when the policyowner needs to change the insured under the policy?

Substitute insured rider

Which of the following, when attached to a permanent life insurance policy, allows the policyowner to customize the policy to provide an additional amount of temporary insurance on the insured, or allows amounts of temporary insurance to cover other family members?

Term rider - may be used to customize a permanent life insurance policy to meet the needs of the policy owner.

Nonforfeiture values guarantee which of the following for the policyowner?

That the cash value will not be lost - because permanent life insurance policies have cash values, there are certain guarantees built into the policy that connot be forfeited by the policyowner. Nonforfeiture values give the insured the right to the cash value even if the policy lapses or is surrendered.

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.

The insured under a $100,000 life insurance policy with a triple indemity rider for accidental death was killed in a car accident. It was determined that the accident was his fault. The triple indemity rider in the policy specifies that the death must not be contributed to by the insured in any manner. In this case, what will the policy beneficiary receive?

$100,000

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 - in this scenario, the death occurred witin the mandatory 30-day grace period. Past due premium would be subtracted from the face amount of the policy.

When a life inurance 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 purchase.

What is the waiting period on a Waiver of Premium rider in life insurance policies?

6 months

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

Life income joint and survivor settlement option guarantees

Income for 2 or more recipients until they die

The interest earned on policy dividends is

Taxable

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

Policyowner

If an insured receives accelerated death benefits, what is the least amount of the orginal death benefit that the beneficiary would receive after the insured's death?

0%

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

Which of the following best describes fixed-period settlement option?

Both the principal and interest will be liquidated over a selected period of time

A business owner was trying to obtain a bank loan to fund the purchase of a new buisness facility, but the bank required proof of additional assets to secure the loan. The business owner then decided to use her $259,00 life insurance policy to secure the loan. Which provision makes this possible?

Collateral assignment - the business owner could make a collateral assignment of his or her life insurance policy to the bank.

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

Death due to a plane crash for a fare-paying passenger

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 purchase

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

Grace period - is a mandatory provision found in all life and health insurance policies that provides coverage for a period of time after the premium becomes past due.

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

Grace period - provided there is sufficient cash value in the policy, this provision triggers a loan at the end of the grace period to keep a policy in force

Which provision of a life insurance policy states the insurer's duty to pay benefits upon the death of the insured, and to whom the benefits will be paid?

Insuring clause

What is the benefit of choosing extended term as a nonforfeiture option?

It has the highest amount of insurance protection

A couple owns a life insurance policy with a Childrens Term rider. Their daughter is reaching the maximum age of dependent coverage, so she will have to concert to permanent insurance in the near future. Which of the following will she need to provide for proof of insurability?

Proof of insurability is not required

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

Refund the premiums paid

When an insured under a life insurance policy died, the designated beneficiary received the face amount of the policy as well as a refund of all the premiums paid. Which rider is attached to the policy?

Return of Premium

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

The insured's estate

A father owns a life insurance policy on his 15-year old daughter. The policy contains the optional Payor benefit rider. If the father becomes disable, what will happen to the life insurance premiums?

The insured's premiums will be waived until she is 21

An insured has chosen joint and 2/3 survivor as the settlement option. What does this mean to the beneficiaries?

The surviving beneficiary will continue receiving 2/3 of the benefit paid when both beneficiaries were alive.

Which of the following statements is TRUE concerning irrevocable beneficiaries?

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

The paid-up addition option uses the dividend

To purchase a smaller amount of the same type of insurance as the original policy

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

insuring clause

Which of the following is true about the premium on the children's rider in a life insurance policy?

It remains the same no matter how many children are added to the policy.

Which of the following statements is TRUE concerning the Accidental Death Rider

It will pay double or triple the face amount.

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

Regarding the free-look provision, the insurance company

Must allow the policyowner to return the policy for a full refund.

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

Which of the following riders would NOT cause the Death Benefit to increase?

Payor Benefit Rider - only pays the premium if the payor is disabled or dies. With Guaranteed Insurability Rider, the policyowner can increase DB at specified ages or events, i.e. marriage or birth of a child; cost of living rider increases DB to keep pace with inflation, in accidental death rider, if the insured dies from an accident, DB is a mulitple of the face amount

Which of the following allows the insurer to relieve a minor insured from premium payments if the minor's parents have died or become disabled?

Payor benefit

Which of the following allows the insurer to relieve a minor insured from premium payments if the mino's parents have died or become disabled?

Payor benefit - if the payor becomes disabled for at least 6 months or dies, the insurer will waive the premiums until the minor reaches a certain age, such as 21.

All of the following are true regarding insurance policy loans EXCEPT

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

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 - this option allows the policy holder to apply policy dividends toward the next years premium. The dividend is subtracted from the premium amount, yielding the new premium due for the next year.

When a life insurance policy was issued, the policyowner designated a primary and a contigent 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 contigent beneficiary