Chapter 3 (part 2)
An insured and his wife are both involved in a head-on collision. The husband dies instantly, and the wife dies 15 days later. The company pays the death benefit to the estate of the insured. This indicates that the life insurance policy had what provision?
Common Disaster
An insured pays an annual premium to his insurer. The insurer promises to pay benefits in accordance with the terms of the contract. This is called
Consideration
An insured owns a $50,000 whole life policy. At age 47, the insured decides to cancel his policy and exercise the extended term option for the policy's cash value, which is currently $20,000. What would be the face amount of the new term policy?
$50,000
For how long is an insurance company allowed to defer policy loan requests?
6 months
What type of insurance would be used for a Return of Premium rider?
Increasing Term
Which of the following is true of a children's rider added to an insider's permanent life insurance policy?
It is term coverage that is convertible to permanent insurance at or prior to the child reaching the maximum coverage
Which life insurance settlement option guarantees payments for the lifetime of the recipient, but also specifies a guaranteed period, during which, if the original recipient dies, the payments will continue to a designated beneficiary?
Life income with period certain
If a settlement option is not chosen by the policy owner or the beneficiary, what option will be used by the insurer?
Lump-sum payment
If the policyowner, the insured, and the beneficiary under a life insurance policy are three different people, who has the ownership rights?
Policyowner
What happens to a policy's cash value under an extended term nonforfeiture option?
The cash balje is converter to the same face amount as in the whole life policy
The insured had his wife named as the beneficiary of his life insurance policy. To ensure that his wife had income for life after the insureds death, he chose the life income settlement option. The amount of payments will be determined by taking into account all of the following except
The insured's age at death
What happens to the proceeds of a life insurance policy if there is no named beneficiary?
The proceeds are paid to the insured's estate
The paid-up addition option used the dividend
To purchase a smaller amount of the same type of insurance as the original policy.
When the policyowner specifies a dollar amount in which installments are to be paid, he/she has chosen which settlement option?
a fixed amount
What is the other term for the cash payment settlement option?
lump sum
Which of the following riders would not cause the death benefit to increase?
payor benefit rider