Course 3- pt.2

K pays on a 20,000 20 year endowment policy for 10 years and dies from an accident. how much will the insurance company pay the beneficiary

$20,000 death benefit ( Policy face value) also known as the death benefit

Which of these types of policies may not have the automatic premium loan provision attached to it?

Decreasing Term

K's whole life insurance policy lasted two months ago due to nonpayment. she would now like to reinstate the policy. All of these statements are correct about the policy's about the policy's reinstatement except

K will forfeit the right to use the automatic loan provision upon reinstatement

Which of these are not an example of a Nonforeiture option

Life Income

Which of these is not considered to be a right given to a policyowner

Modify a provision in the insurance contract

Which of the following is an example of nonforfeiture option

Reduced Paid-up option

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

Reinstatement

Typically a life insurance death benefit is paid by a lump-sum payment. A(n) __________ option is a method of distributing a Life Insurance policy's death benefit OTHER than by a lump sum payment.

Settlement

Which of these types of life insurance allows the policy owner to have level premiums and to also choose from a selection investment options

Variable life

A life insurance policy which ensures that the premium will be paid if the insured becomes disabled has what kind of rider attached?

Waiver of premium- a rider on a life insurance policy that guarantees that the premium will be paid if the insured is disabled

When is the face amount of a whole life policy paid

When the insured dies or at the policy maturity date, whichever happens first

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

Who the policy owner is and what rights the policy owner is entitled to

Whose life is covered on a life insurance policy that contains a payor benefit clause

child

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

child term rider

The incontestable clause allows an insurer to

contest a claim during the contestable period

A potential client, Age 40, would like to purchase a whole life policy that will accumulate cash value at a faster rate in the early years of the policy. which of these statements made by the producer would be correct?

20-Pay Life accumulates cash value faster than Straight Life

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

Accidental Death and Dismemberment (AD&D)

A policy owner may generate taxable income from which of the following dividend option

Accumulation at Interest

What action can a policyowner take if an application for a bank loan requires collateral?

Assign policy owner =ship to the bank

S has a whole life policy with a premium payment due soon. Which provision would keep the policy in force if S does not make the required payment and the policy has adequate cash value from which the premium payment can be made

Automatic Payment Loan

S has a Whole Life policy with a premium payment due soon. Which provision would keep the policy in force if S does not make the required payment and the policy has adequate cash value from which the premium payment can be made?

Automatic Policy Loan

The automatic premium loan provision is designed to

Avoid a policy lapse

P died five years after purchasing a life policy. While investigating the claim, the insurer discovered material misrepresentations made by P during the application process. Which of these actions will the insurer take?

Beneficiary will be paid the death Benefit

Additional coverage can be added to a whole life policy by adding a

Decreasing term rider

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 - option allows the policy owner to use the cash value to purchase a term insurance policy with a death benefit equal to that of the original whole-life policy

All of these settlement options involve the systematic liquidation of the death proceeds in the event of the insureds death, EXCEPT

Interest Only

How are policyowner dividends treated in regards to income tax?

Interest on accumulations is taxed

B receives yearly dividends and interest from a participating life insurance policy. Which of these should B include as gross income for federal income tax purposes

Interest only

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

Dividends paid from a life insurance policy are

Issued by the insurer

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

Payor benefit rider

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

The _____ is authorized to assign a life insurance policy as collateral for a loan

Policyowner

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/

Rerun of premium rider

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

Taxed as ordinary income

A_____ rider may be used to include coverage for children under their parents; life insurance policy

Term

S would like to use dividends from her life insurance policy to purchase paid-up additions. All of these would be factors that determine how much coverage can be purchased except

The beneficiary's age

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

The entire contract provision

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