Insurance Exam: Life Policy Riders, Provisions, Options and Eclusions

To meet the requirement of the entire contract policy provision, an insurance policy must contain what?

A copy of the original insurance application

Which of the two types of policy assignments requires transfer of all ownership rights in the policy to a third party?

Absolute Assignment

What type of assignment is used to secure the payment of a debt with an existing life insurance policy?

Collateral Assignment

What type of beneficiary is next in line after the primary beneficiary?

Contingent/Secondary Beneficiary

What life insurance policy provision states that both the policy and a copy of the application from the contract between the policy owner and the insurer?

Entire Contract

What provision in an insurance policy extends coverage beyond the premium due date?

Grace Period

What required provision protects against unintentional policy lapse?

Grace Period

The sole beneficiary of a life insurance policy dies before the insured. If the policy owner does not amend the beneficiary designation, what will happen to the policy's death benefit?

It will be paid to the insured's estate

If a settlement option is not chosen by the beneficiary or policy-owner, which option will be used?

Lump-sum payment

Is the beneficiary required to have insurable interest in the insured?

No, beneficiaries do not have insurable interest in the insured

What is the name from a life insurance policy rider that provides coverage on the insured's family members?

Other-Insured Rider

An insurer has discovered a representation on a life insurance policy application regarding the insured's age. The insured is 10 years older than he stated on the application. What will the insurer do regarding the death benefit?

Pay a reduced death benefit

With the interest only settlement option, what happens to the policy's death benefit?

Policy proceeds are retained by the insurance company; only the interest is paid to the beneficiary

What beneficiary designation has first claim to the death proceeds of a life insurance policy?

Primary Beneficiary

What are policy dividends?

Return of unused premiums

What type of beneficiary can be changed at any point by the policy owner?

Revocable

What happens to a policy's cash value under an extended term nonforfeiture option?

The cash value is converted to the same face amount as in the whole life policy

An applicant for life insurance misstated her age on the policy application. How will this affect the death benefit?

The death benefit will be adjusted to the amount that the insured could obtain for her correct age.

The sole beneficiary of a life insurance policy dies before the insured. If the policy owner fails to change the beneficiary before the insured's death, the proceeds of the policy will go to

The insured's estate -In the absence of a viable beneficiary, proceeds will be paid to the estate of the insured.

In the fixed-period settlement option how will the number of installments for the death benefit proceeds determine the amount of the installments?

The longer the period selected, the smaller each installment will be

What happens to the proceeds of a life insurance policy if there is no named beneficiary?

The proceeds are paid to the insured's estate

What is the purpose of a free-look period?

To allow the insured to return the policy with a full refund

What is the purpose of settlement options in life insurance policies?

To determine how the death benefit will be paid to the beneficiary

What life policy rider allows the company to forgo collecting the premium if the insured becomes disabled?

Waiver of Premium

What are the most common exclusions in life insurance policies?

War and military service, hazardous occupation, and aviation