Individual Life Insurance Contract - Provisions and Options

Reduction of premium

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?

The same face amount as in the whole life policy.

Under an extended term nonforfeiture option, the policy cash value is converted to

Cash value

What limits the amount that a policyowner may borrow from a whole life insurance policy?

Equal to the original policy for as long a period of time that the cash values will purchase.

When a life insurance policy is cancelled and the insured has selected the extended term nonforfeiture option, the cash value will be used to purchase term insurance that has a face amount

The insured is no longer covered under the surrendered policy.

Which of the following is true if the policyowner exercises his/her right to surrender his/her life insurance policy for its current cash value? Assume that the policyowner and insured are the same person.

$9,800

An insured had a $10,000 term life policy. The annual premium of $200 was due on February 1; however, the insured failed to pay the premium. He died on February 28. How much would the beneficiary receive from the policy?

Paid-up additions.

An insured has a life insurance policy from a participating company and receives quarterly dividends. He has instructed the company to apply the policy dividends to increase the death benefit. The dividend option that the insured has chosen is called

Extended Term

Which nonforfeiture option has the highest amount of insurance protection?

It begins when the policy is delivered.

Which of the following is TRUE about the 10-day free-look period in a Life Insurance policy?

Class designation.

When a policyowner designates a group of individuals as the beneficiary of a life insurance death benefit without specifically naming the individuals, this is called

Purchase a single premium policy for a reduced face amount.

When a whole life policy lapses or is surrendered prior to maturity, the cash value can be used to

A minor son of the insured

Which of the following named beneficiaries would NOT be able to receive the death benefit directly from the insurer in the event of the insureds' death?