exam 2

P purchases a $50,000 term life insurance policy in 2005. One of the questions on the application ask 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

The Consideration clause in a life insurance contract contains what pertinent information?

Amount of premium payments and when they are due

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

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

P is blinded in an industrial accident. Which provision of his life insurance policy will pay a stated benefit amount?

accidental death and dismemberment provision

B owns a Whole Life policy with a guaranteed insurability option that allows him to purchase, without evidence of insurability, stated amounts of

additional Whole Life coverage at specified times

L takes out a life insurance policy and dies 10 years later. During the claim process, the insurer discovers that L had understated her age on the application. Under the Misstatement of Age provision, the insurer will

adjust the benefit to a reduced amount

An insured is past due on his life insurance premium, but is still within the Grace Period. What will the beneficiary receive if the insured dies during this Grace Period?

Full face amount minus any past due premiums

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 received dividends

The automatic premium loan provision is designed to

avoid a policy lapse

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

cash value provision

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

Which of these actions is taken when a policyowner uses a Life Insurance policy as collateral for a bank loan?

collateral assignment

Which of these types of policies may NOT have the Automatic Premium Loan provision attached to it?

decreasing term

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

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

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?

exclusions

examples of nonforfeiture option

extended term , cash surrender, reduced paid-up

Which of the following statements is CORRECT about accelerated death benefits?

must have terminal illness to qualify

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

A provision in a life insurance policy that pays the policyowner an amount that does not surpass the guaranteed cash value is called the

policy loan provision

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

reinstatement

Which of these provisions require proof of insurability after a policy has lapsed

reinstatement

what is the suicide provision designed to do?

safeguard the insurer from an applicant who is contemplating suicide

D was actively serving in the Marines when he was killed in an automobile accident while on leave. His $100,000 Whole life policy contains a War Exclusion clause. How much will D's beneficiary's receive?

the full face amount

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