Chapter Exam 2 - Life Provision

P purchases a $50,000 whole life insurance policy in 2005. One of the questions on the application asks if P engages in scuba diving, to which P answers "No". The policy is then issued with no scuba exclusions. In 2010, P takes up scuba diving and dies in a scuba-related accident in 2011. What will the insurer pay to P's beneficiary?

$50,000 minus any outstanding policy loans

What action will an insurer take if an interest payment on a policy loan is not made on time?

Automatically add the amount of interest due to the loan balance

The provision that can be used to put an insurance policy back in force after it has lapsed due to nonpayment is called:

Reinstatement

What does the ownership clause in a life insurance policy state?

Who the policyowner is and what rights the policyowner is entitled to

A Return of Premium life insurance policy is:

Whole life and increasing term

Which rider provides coverage for a child under a parent's life insurance policy?

Child term rider

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?

Exclusion

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):

Insuring Agreement

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

Long term care

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?

Owner's Rights

P is the insured on a participating life policy. Which statement is true if P's premiums are waived due to a disability?

P will still receive declared benefits

All of the following statements are true regarding a policy's Grace period, EXCEPT:

Past due premiums are waived

When does a Guaranteed Insurability Rider allow the insured to buy additional coverage?

at future dates specified in the contract with no evidence of insurability required

The accidental death and dismemberment provision in a life insurance policy would pay additional benefits if the insured

is blinded in an accident

What provision in a life insurance policy states that the application is considered part of the contract?

Entire Contract Provision

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

Entire Contract Provision