Chapter 5: Individual Life Insurance Contract - Provisions and Options
A policyowner fails to pay the premium due on his whole life policy after the grace period passes, but the policy remains in force. This is due to what provision?
Automatic premium loan
An insured pays an annual premium to his insurer. In return, the insurer promises to pay benefits in accordance with the terms of the contract. This is called
Consideration
All of the following statements concerning dividends are true EXCEPT
Dividend amounts are guaranteed in the policy.
What provision in an insurance policy extends coverage beyond the premium due date?
Grace period
Which of the following is true regarding a single life settlement option?
It provides income the beneficiary cannot outlive.
If the policyowner, the insured, and the beneficiary under a life insurance policy are three different people, who has the ownership rights?
Policyowner.
If a life insurance policy has an irrevocable beneficiary designation,
The beneficiary can only be changed with written permission of the beneficiary.
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.
The paid-up addition option uses the dividend
To purchase a smaller amount of the same type of insurance as the original policy.
An absolute assignment is a
Transfer of all ownership rights in a policy.
What type of account will most likely be established for a minor?
Trust
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
