Insurance exam #2

Group life insurance is a single policy written to provide coverage to members of a group. Which of the following statements concerning group life is CORRECT?

100% participation of members is required in noncontributory plans

An insured owns a $50,000 whole life policy. At age 47, the insured decides to cancel his policy and exercise the extended term option for the policy's cash value, which is currently $20,000. What would be the face amount of the new term policy?

50,000

The full premium was submitted with the application for life insurance, and the policy was issued two weeks later as requested. When does the policy coverage become effective?

As of the application date

An insured receives an annual life insurance dividend check. What term best describes this arrangement?

Cash option

Which of the following includes information regarding a person's credit, character, reputation, and habits?

Consumer report

The death benefit in a variable universal life policy

Depends on the performance of a separate account

What required provision protects against unintentional lapse of the policy?

Grace period

An insurer receives a report regarding a potential insured that includes the insured's financial status, hobbies and habits. What type of a report is that?

Inspection report

Which statement is NOT true regarding a Straight Life Policy?

Its premium steadily decreases over time, in response to its growing cash value

Which of the following settlement options in life insurance is known as straight life?

Life income

An insured has a continuous premium whole life policy. She would like to use the policy dividends to pay off her policy sooner than would have been possible otherwise. What dividend option could she use?

Paid-up option

Which of the following allows the insurer to relieve a minor insured from premium payments if the minor's parents have died or become disabled?

Payor Benefit

Which of the following has the right to convert the existing term coverage to permanent insurance?

Policyowner

All of the following entities regulate variable life policies EXCEPT

The Guaranty Association

Which of the following would provide an underwriter with information concerning an applicant's health history?

The Medical Information Bureau

An insured purchased a 10-year level term life policy that is guaranteed renewable and convertible. What happens at the end of the 10-year term?

The insured may renew the policy for another 10 years, but at a higher premium rate

A father owns a life insurance policy on his 15-year-old daughter. The policy contains the optional Payor Benefit rider. If the father becomes disabled, what will happen to the life insurance premiums?

The insured's premiums will be waived until she is 21

All of the following are true about variable products EXCEPT

The premiums are invested in the insurer's general account

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

The same face amount as in the whole life policy

Which of the following is true regarding taxation of accelerated benefits under a life insurance policy?

They are tax free to terminally ill insured