4 - Life Insurance Policies - Provisions, Options and Riders Part 2

What is considered the collateral on a life insurance policy loan? no collateral is needed the policy's cash value the policy's face value the equity in a policyowner's home

the policy's cash value

A policyowner is permitted to take out a policy loan on a whole life policy at what point? when the policy has a cash value when the policy has been in force 2 years when the cash value equals the face amount when the policyowner has demonstrated financial need

when the policy has a cash value

Which life insurance policy would be eligible to include an automatic premium loan provision? increasing term level term decreasing term whole life

whole life

How long can an insurer legally defer paying the cash value of a surrendered life insurance policy? 2 months 4 months 6 months 12 months

6 months

A life insurance policy that has the ability to reduce the death benefit is called the accelerated benefit insuring clause payor benefit spendthrift clause

accelerated benefit

The absolute assignment of a life insurance policy results in all incidents of ownership transferred to the assignee the assignee receives partial incidents of ownership the transfer of ownership is revocable at the discretion of the original policyowner evidence of insurability must be proved before ownersgip is transferred

all incidents of ownership transferred to the assignee

Which statement regarding the waiver of premium rider is accurate? policy loans are used to keep the policy alive cash payment is not directly provided to the policyowner insurance companies are required to offer this to all policyowners premiums are waived in the event of bankruptcy

cash payment is not directly provided to the policyowner

What is payable to the policyowner if a whole life policy is surrendered prior to its maturity date? loan value cash value face amount minus any past due premiums and loans nothing

cash value

Which of these is NOT a true statement of the war exclusion? civil insurrections apply prevents an insurer's financial catastrophe typically applies to declared and undeclared wars war risk is typically uninsurable

civil insurrections apply

In what way is a life insurance policy affected by an accelerated benefit payment? decreases the premiums extends the grace period increases the policy loan balance decreases the death benefit

decreases the death benefit

Which of the following is NOT guaranteed in a whole life policy? settlement options nonforfeiture options dividend scale policy loan values

dividend scale

Scott has a life insurance policy in which the dividends are left with the insurance company. This particular policy may be paid up when the cash value plus accumulated dividends: equal the net single premium for the same face amount at the insured's attained age can purchase extended term coverage equal the nonforfeiture value can purchase a paid-addition

equal the net single premium for the same face amount at the insured's attained age

Which life insurance policy option allows the policyowner to have coverage equal to the net death benefit of the lapsed policy? reduced paid-up nonforfeiture option accelerated benefits option extended term nonforfeiture option cash surrender option

extended term nonforfeiture option

Which benefit supplement added to a life insurance policy insures an entire family? kin term household term family term group term

family term

What is the name of the rider that provides an additional purchase option in a life insurance policy? payor rider cost of living rider waiver of premium rider guaranteed insurability rider

guaranteed insurability rider

Which of the following is NOT subject to the promise to pay in an insuring clause? how the premium is calculated policy provisions policy conditions policy exclusions

how the premium is calculated

Which life insurance clause PROHIBITS an insurance company from QUESTIONING the validity of the contract after a stated period of time has passed? entire contract provision grace period provision incontestable provision insuring provision

incontestable provision

Which of these would NOT be a valid reason to add a waiver of premium rider to a life insurance policy? prevents a policy from lapsing premiums waived by the insurer do not have to be repaid policy's cash value would still increase it allows a policy loan to cover premium payments if the policyowner becomes totally disabled

it allows a policy loan to cover premium payments if the policyowner becomes totally disabled

A policyowner has a life insurance policy where she had listed her age on the application as 5 years younger than her actual age. If she dies and the insurer discovers the misstatement of age, how much will the insurance company pay? nothing more than face amount less than face amount full face amount

less than face amount

After the extended term life nonforfeiture option is chosen, the available insurance will be increasing term for a stated period of time level term for a stated period of time decreasing term for a stated period of time renewable for a stated period of time

level term for a stated period of time

Tim is confined to a nursing home but doesn't have a terminal illness. Which life insurance rider is designed to help pay for this type of expense? cash value rider viatical rider accelerated benefit rider long-term care benefit rider

long-term care benefit rider

How may an insurance company classify an accidental death benefit on a life policy? optional policy rider provision of the policy nonforfeiture option mandatory policy rider

optional policy rider

A life insurance guaranteed insurability rider gives the insured the right, without proving insurability, to purchase life insurance policies on his children as they are born purchase life insurance policies on a spouse after becoming married purchase additional life insurance at anytime periodically purchase additional insurance

periodically purchase additional insurance

If an insured dies during the grace period without having paid the premium, how much will the insurer pay? policy face amount total premiums paid will be returned policy's face amount minus any premiums due nothing

policy's face amount minus any premiums due

How is the insured protected if a payor benefit rider is attached to the life insurance policy? premiums are waived policy loan will automatically cover the premiums if payor becomes financially insolvent premium payments are waived in the event the premium payor dies or becomes disabled policy loan will automatically cover the premiums if payor dies

premium payments are waived in the event the premium payor dies or becomes disabled

The automatic premium loan provision can be accurately described as a provision that charges a premium for the right to borrow against the cash value provision that provides a loan for necessary expenditures such as hospital bills provision that automatically waives an unpaid premium at the end of the grace period provision that provides a policy loan to pay any premiums by the end of the grace period

provision that provides a policy loan to pay any premiums by the end of the grace period

Which of the following is NOT a dividend option for a life insurance policy? elect to take the dividends in cash allow the dividends to accumulate interest use the dividends to pay all or part of the next premium due receiving the entire policy cash value

receiving the entire policy cash value

What effect can a long-term care benefit rider on a life insurance policy? increased cash value decreased cash value increased death benefit decreased death benefit

reduced death benefit

Which of these statements regarding the extended term insurance nonforfeiture option in a life policy is accurate? evidence of insurability is required coverage remains until death of the insured the premium to purchase the coverage comes from the policy's cash value cash value will continue to grow

the premium to purchase the coverage comes from the policy's cash value

A life insurance policy that includes a return of premium rider will pay the beneficiary how much upon the insured's death? total premiums paid plus the policy face amount face amounts plus interest accrued interest accrued plus total premium paid face amount minus any outstanding loan balances

total premiums paid plus the policy face amount