Chapter 3

S buys a $50,000 whole life policy with a $50,000 Accidental Death and Dismemberment rider. S dies 1 year layter of natural causes. How much will the insurer pay the beneficiary?50,000

50,000

The option that provides an additional death benefit for a limited amount of time at the lowest possible cost is called a

AD&D

A cost of living rider gives the insured

Additional death benefits

The automatic premium loan provision is designed to:

Avoid a policy lapse

Which statement regarding Misstatement of Age provision is considered to be true?

Coverage will be adjusted to reflect the insureds true age if a misstatement of age is discovered

Which of the following nonforfeiture options offers the highest death benefit?

Extended term

All of these settlement options involve the systematic liquidation of the death proceeds in the event of the insured's death, EXCEPT:

Interest Only

Which of the following statements about accumulated interest earned on dividends from an insurance policy is TRUE

It is taxed as ordinary income

An insured's inability to perform two or more activities of daily living may trigger which type of rider?

Long term care

M has an insurance policy that also has an outstanding policy loan at the time of M's death. The insurer will deduct the outstanding loan balance from the

Policy Proceeds

J let her life insurance policy lapse 8 months ago due to nonpayment. She can reestablish coverage under which of the following provisions?

Reinstatement provision

The advantage of reinstating an original life policy is

The premiums are based on a younger age

A Return of Premium life insurance policy is:

Whole life and insuring term

Additional coverage can be added to a Whole Life policy by adding a (n)

decreasing term

Dividends paid from a life insurance policy are issued by

insurer

When a misrepresentation on a life insurance policy application is discovered, what action may an insurance company take?

Void the policy only if it is discovered during the contestable period and proven to be material

The incontestable clause allows an insurer to

contest a claim during the contestable period

How are surrender chargers deducted in a life policy with a rear-end loaded provision?

Deducted from the death benefit

Which provision prevents an insurer from changing the terms of the contract with the policy owner by referring to documents not found within the policy itself?

Entire contract Provision

An insured is past due on his life insurance premium, but is still within the Grace Period. What will the beneficiary receive if the insured dies during this Grace Period

Full face amount minus any past due premiums

A long-term care rider in a life insurance policy pays a daily benefit in the event go which of the following?

Inability of the insured to perform more than 2 activities of daily living (ADL's)

The agreement in a life insurance contract that states a specific sum of money will be paid to a designated person upon a insured's death is called a(n)

Insuring agreement

The Accelerated Death Benefit provision in a life insurance policy is also known as a(n)

Living Benefit

Which of the following statements is CORRECT about accelerated death benefits

Must have terminal illness to qualify

In a life insurance policy, which provision states who may select policy options, designated and name a beneficiary, and be the recipient of any financial benefits from the policy

Owner's rights

A young, married teacher has 2 children and owns a Whole Life policy. If the teacher wants an increasing Death Benefit to protect against inflation, the teacher should select which of the following Dividend options?

Paid-Up Additional Insurance

A provision in a life insurance policy that pays the policy owner an amount that does not surpass the guaranteed cash value is called the

Policy loan provision

What benefit does the Payor clause on Juvenile Life policy provide?

Premiums are waived if payor becomes disabled

Which of these Nonforfeiture Options continue a build-up of cash value?

Reduced paid-Up

Which of these provisions require proof of insurability after a policy has lapsed?

Reinstatement

S buys a $10,000 Whole life policy in 2003 and pays an annal premium of $100. S dies 5 years later in 208 and the insurer pays the beneficiary $10,500, what kind of rider did S include the policy?

Return of premium rider

D was actively serving in the Marines when he was killed in an automobile accident while on leave. His $100,000 Whole Life policy contains a War Exclusion clause. How much will D's beneficiary receive?

The full face amount