Chapter 3: Life Provisions (Part 2)

B owns a whole life policy with a guaranteed insurability option that allows him to purchase, without evidence of insurability, stated amounts o

Additional whole life coverage at specified times

what does the insuring agreement in a life insurance contract establish?

An insurer's basic promise

A policy loan is made possible by which of these life insurance policy features?

Cash value provision-The Cash value provision makes a policy loan possible.

N is covered by a Term Life policy and does not make the required premium payment which was due August 1. N dies September 15. What action will the insurer take?

Claim will be denied

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

Inability of the insured to perform more than 2 Activities of Daily Living (ADL's)

Which of these is NOT considered to be a right given to a policyowner?

Modify a provision in the insurance contract

M had an annual life insurance premium payment due January 1. She died January 10 without making the premium payment. What action will the insurer take?

Pay face amount minus the past due premium

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

S buys a $10,000 Whole Life policy in 2003 and pays an annual premium of $100. S dies 5 years later in 2008 and the insurer pays the beneficiary $10,500. What kind of rider did S include on the policy?

Return of premium rider

A Return of Premium life insurance policy is

Whole life and Increasing term

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

decreasing term rider

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

deducted when the policy is discontinued

D is the policyowner and insured for a $50,000 life insurance policy. The beneficiary is D's wife. D and his wife divorce and D remarries, transferring ownership of his policy to his new wife. If D dies without making any further changes, to whom will the policy proceeds be paid to?

ex wife

in a life insurance policy which feature states that the policy will not cover certain risks?

exclusion

D owns a whole life policy that was purchased 10 years ago. if the premium payments suddenly stop and D takes no additional action, which nonforfeiture option will the insurer likely proceed with?

extended term

how are policyowner dividends treated in regards to income tax?

interest on accumulations is taxed

dividends paid from a life insurance policy are

issued by the insurer

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

owners rights

which life insurance rider typically appears on a juvenile life insurance policy?

payor benefit rider

what is the suicide provision designed to do?

safeguard the insurer from an applicant who is contemplating suicide

Which of these life insurance riders allows the applicant to have excess coverage?

term rider

The Consideration clause in a life insurance policy indicates that a policyowner's consideration consists of a completed application and

the initial premium

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

the insuring clause or "insuring agreement"

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 ____is authorized to assign a life insurance policy as collateral for a loan

policyowner

The Accidental Death and Dismemberment (AD&D) provision in a life insurance policy would pay additional benefits if the insured

is blinded in an accident

Which of the following provisions guarantees that premiums will be waived if a Juvenile Life policyowner becomes disabled?

payor clause

N is a student pilot with a large life insurance policy. Which of these features would limit the insurer's obligation in the event N was killed while flying as a student pilot?

exlcusion

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