Insurance Exam:Life ( Life policy provisions, riders, and options)
which of the following statements is TRUE concerning the accidental death rider? A) this rider is only available in insureds over the age of 65 B) it is only available in group insurance C) it will pay double or triple the face amount D) it is also know as triple indemnity rider
it will pay double or triple the face amount
The type of settlement option which pays throughout the lifetimes of two or more beneficiaries is called A) fixed period B) fixed amount C) joint life D) joint and survivor
joint and survivor
Which two terms are associated directly with the premium? A) term or permanent B) renewable or convertible C) level or flexible D) fixed or variable
level or flexible
the two types of assignments are A) absolute and collateral B) absolute and partial C) complete and partial D) complete and proportionate
absolute and collateral
An insured misstates her age at the time the life insurance application is taken. This misstatement may result in A) adjustment in the amount of death benefit B) no change whatsoever C) automatic lapse D) recession on the policy
adjustment in the amount of death benefit
the automatic premium loan provision is activated at the end of the A) elimination period B) policy period C) grace period D) free-look period
grace period
the validity of coverage under a life insurance policy may not be consented, except for nonpayment of premium, after the policy has been in force for at least how many years? A) 1 year B) 2 years C) 5 years D) 7 years
2 years
when the insured selects the extended term nonforfeiture option, the cash value will be used to purchase term insurance with what face amount? A) in lesser amounts for the remaining policy term of age 100 B) equal to the cash value surrendered from the policy C) the same as the original policy minus the cash value D) equal to the original policy for as long as the cash values will purchase
equal to the original policy for as long as the cash values will purchase
Which nonforfeiture option has the highest amount of insurance protection? A) conversion B) decreasing term C) reduced paid up D) extended term
extended term
When the policyowner specifies a dollar amount in which installments are to be paid, he/she has chosen which settlement option? A) extended amount B) fixed amount C) fixed period D) life income period certain
fixed amount
If a beneficiary wants a guarantee that benefits paid from principal and interest would be paid for a period of 10 years before being exhausted, what settlement option should the beneficiary select? A) life with period certain B) fixed amount C) interest only D) fixed period
fixed period
What required provision protects against unintentional lapse of the policy? A) reinstatement B) grace period C) assignment D) payment of premiums
grace period
which provision of a life insurance policy states the insurers duty to pay benefits upon the death of the insured, and to whom the benefits will be paid? A) beneficiary clause B) consideration clause C) insuring clause D) entire contract clause
insuring clause
all of the following are nonforfeiture options EXCEPT A) reduced paid up B) interest only C) cash surrender D) extended term
interest only
the Policyowner wants to make sure that upon his death, the life policy will pay a portion of the proceeds annually to his spouse, but that the principal will be paid to their children when they reach a certain age. which settlement option should the Policyowner choose? A) fixed amount option B) interest only option C) life income with period certain D) joint and survivor
interest only option
which of the following is TRUE about the 10 day free look period in a life insurance policy? A) it applies only to term life insurance policies B) it is optional on all life insurance policies C) it beings when the policy is delivered D) it begins when the application is signed
it begins when the policy is delivered
all of the following are true regarding insurance policy loans EXCEPT A) the amount of the outstanding loan and interest will be deducted from the policy proceeds when the insured dies B) the policy will terminate if the loan plus interest equals or exceeds the cash value C) policy owners can borrow up to the full amount of their whole life policy cash value D) policy loans can be made on policies that do not accumulate cash value
policy loans can be made on policies that do not accumulate cash value
the interest earned on policy dividends is A) 40% taxable, similar to a capital gain B) taxable C) nontaxable D) tax deductible
taxable
what is the advantage of reinstating a policy instead of applying for a new one? A) the cash values have gained interest while the policy was lapsed B) the original age is used for premium determination C) proof of insurability D) the face amount can be increased
the original age is used for premium determination
An insured has chosen joint and 2/3 survivor as the settlement option. What does this mean to the beneficiaries? A) the beneficiary will receive 2/3 of the total benefit, with the final 1/3 payable when the first beneficiary dies B) one of the beneficiaries will receive 1/3 and the other 2/3 of the proceeds when the insured dies C) the surfing beneficiary will continue receiving 2/3 of the benefit paid when both beneficiaries were alive D) the beneficiary will receive 2/3 of the lump sum up front and the remaining 1/3 will be paid over time
the surviving beneficiary will continue receiving 2/3 of the benefit paid when both beneficiaries were alive
under which of the following circumstances would an insurer pay accelerated benefits? A) a couple wants to build a house and would like to make a larger down payment B) an insured is diagnosed with cancer and needs help paying for her medical treatment C) a couple is nearing retirement and needs a steady stream of income D) an insured is looking for a way to put her daughter through college
an insured is diagnosed with cancer and needs help paying for her medical treatment
which of the following protects the insured from an unintentional policy lapse due to a nonpayment of premium? A) extended term B) reinstatement C) reduced paid-up option D) automatic premium loan
automatic premium loan
the accelerated benefits provision will provide for an early payment of the death benefit when the insure A) needs to borrow money B) has earned enough credits C) becomes disabled D) becomes terminally ill
becomes terminally ill
which of the following best describes fixed-period settlement option? A) the death benefit must be paid out in a lump sum within a certain time period B) income is guaranteed for the life of the beneficiary C) both the principal and interest will be liquidated over a selected period of time D) only the principal amount will be paid out within a specified period of time
both the principal and interest will be liquidated over a selected period of time
An insured receives an annual life insurance dividend check. What term best describes this arrangement? A) reduction of premium B) annual dividend provision C) accumulation at interest D) cash option
cash option
what is the clause that describes the method of paying the death benefit in the event that the insured and beneficiary are both killed in the same accident? A) settlement clause B) nonforfeiture clause C) common disaster clause D) spendthrift clause
common disaster clause
According to the entire contract provision, what document must be made part of the insurance policy? A) agents report B) outline of coverage C) copy of the original application D) buyers guide
copy of the original application
all of the following are dividend options EXCEPT A) paid up additions B) fixed period installments C) accumulated at interest D) reduction of premium
fixed period installments
which is TRUE about the cash surrender nonforfeiture option? A) funds exceeding the premium paid are taxable as ordinary income B) after the cash surrender, the insured is covered for a grace period of one month C) the policy remains active for some time after the policyholder opts for cash surrender D) the policyholder receives the original cash value of the policy
funds exceeding the premium paid are taxable as ordinary income
what provisioning an insurance policy extends coverage beyond the premium due date? A) free look B) automatic premium loan C) waiver of premium D) grace period
grace period
At the time the insured purchased her life insurance policy, she added a rider that will allow her to purchase additional insurance in the future without having to prove insurability. This rider is called A) waiver of cost of insurance B) accelerated benefits C) cost of living D) guaranteed insurability
guaranteed insurability
an individual is purchasing a permanent life insurance policy with a face vale of $25,000. while this is all the insurance that he can afford at this time, he wants to be sure that additional coverage will be available in the future. which of the following options should be included in the policy? A) divided options B) guaranteed renewable option C) nonforfeiture options D) guaranteed insurability option
guaranteed insurability options
If a life policy allows the policyowner to make periodic additions to the face amount at standard rates, without proving insurability, the policy includes a A) guaranteed insurability rider B) paid-up additions option C) cost of living provision D) nonforfeiture option
guaranteed insurability rider
A father purchases a life insurance policy on his teenage daughter and adds the Payor Benefit rider. In which of the following scenarios will the rider waive the payment of premium? A) if the daughter is disabled for any length of time B) if the father is disabled for more than 6 months C) if the father is disabled for at least a year D) if the daughter is disabled for more than 3 months
if the father is disabled for more than 6 months
Life income joint and survivor settlement option guarantees A) income for 2 or more recipients until they die B) payment of interest on death proceeds C) payout of the entire death benefit D) equal payments to all recipients
income for 2 or more recipients until they die
the life insurance policy clause that prevents an insurance company from denying payment of a death claim after a specified period of time is known as the A) reinstatement clause B) insuring clause C) misstatement of age clause D) incontestability
incontestability clause
what type of insurance would be used for a return of premium rider? A) decreasing term B) annually renewable term C) increasing term D) level term
increasing term
what would be an advantage to naming a contingent (or secondary) beneficiary in a life insurance policy? A) it determines who receives policy benefits if the primary beneficiary is deceased B) it allows creditors to receive payment out of the proceeds C) it ensures the policy will be split between the primary and contingent beneficiaries D) it requires that someone who is not the primary beneficiary handles the estate
it determines who receives policy benefits if the primary beneficiary is deceased
what is the benefit of choosing extended term as a nonforfeiture option? A) it matures at age 100 B) it allows for coverage to continue beyond maturity date C) it can be converted to a fixed annuity D) it has the highest amount of insurance protection
it has the highest amount of insurance protection
When a reduced-paid up nonforfeiture option is chosen, what happens to the face amount of the policy? A) it is reduced to the amount of what the cash value would buy as a single premium B) it is increased when extra premiums are paid C) it decreases over the term of the policy D) it remains the same as the original policy, regardless of any differences in the value
it is reduced to the amount of what the cash value would buy as a single premium
which of the following is true of a children's rider added to an insureds permanent life insurance policy? A) each child covered must show evidence of insurability B) it is term coverage that is convertible to permanent insurance at or prior to the child reaching the maximum coverage age C) it is permanent insurance D) the policy covers only the natural children of the insured
it is term coverage that is convertible to permanent insurance at or prior to the child reaching the maximum coverage age
which of the following is true about the premium on the children's rider in a life insurance policy? A) it remains the same no matter how many children are added to the policy B) it decreases when the oldest child reaches the age 21 C) it increases when a newborn baby is added to the policy D) it decreases when an adopted child is added to the policy
it remains the same no matter how many children are added to the policy
which of the following is true about the premium on the children's rider in a life insurance policy? A) it remains the same no matter how many children are added to the policy B) it decreases when the oldest child reaches the age of 21 C) it increases when a newborn baby is added to the policy D) it decreases when an adopted child is added to the policy
it remains the same no matter how many children are added to the policy
which of the following statements about the reinstatement provision is true? A) it permits reinstatement within 10 years after the policy lapsed B) it provides for reinstatement of a policy regardless of the insured health C) it guarantees the reinstatement of a policy that has been surrendered for cash D) it requires the Policyowner to pay all overdue premiums with interest before the policy is reinstated
it requires the Policyowner to pay all overdue premiums with interest before the policy is reinstated
which of the following statements is TRUE about a policy assignment? A) it transfers rights of ownership from the owner to another person B) it is the same as a beneficiary designation C) it permits the beneficiary to designate the person to receive the benefits D) it authorizes an agent to modify the policy
it transfers rights of ownership from the owner to another person
which of the following settlement options in life insurance is known as straight life? A) life with period certain B) fixed amount C) life income D) single life
life income
Which life insurance settlement option guarantees payments for the lifetime of the recipient, but also specifies a guaranteed period, during which, if the original recipient dies, the payments will continue to a designated beneficiary? A) fixed-amount B) life income with period certain C) joint and survivor D) single life
life income with period certain
which of the following riders added to a life insurance policy can pay part of the death benefit to the insured to cover expenses incurred in a nursing or convalescent home? A) long term care B) accidental death C) guaranteed insurability D) payor benefit
long term care
If a settlement option is not chosen by the policy owner or the beneficiary, what option will be used? A) fixed period B) fixed amount C) lump sum D) life income
lump sum
what is the other term for the cash payment settlement option? A) face amount B) proceeds C) lump sum D) principal amount
lump sum
what is the term for how frequently a Policyowner is required to pay the policy premium? A) mode B) schedule C) grace period D) consideration
mode
the dividend option in which the Policyowner uses dividends to purchase a term policy for one year is referred to as the A) paid-up additions B) one-year term option C) paid up-option D) accelerated endowment
one-year term option
a rider attached to a life insurance policy that provides coverage on the insureds family members is called the A) payor rider B) other-insured rider C) change of insured rider D) juvenile rider
other-insured rider
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 A) one year term purchase B) accumulation at interest C) reduction of premiums D) paid up additions
paid up additions
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? A) reduction of premium B) accumulation at interest C) paid up option D) one year term
paid up option
which option is being utilized when the insurer accumulates dividends at interest and then uses the accumulated dividends, plus interest, and the policy cash value today the policy up early? A) paid-up additions B) dividend accumulation option C) paid-up option D) accumulation at interest
paid-up option
which of the following allows the insurer to relieve a minor insured from premium payments if the minors parents have died or become disabled? A) payor benefit B) jumping juvenile C) juvenile premium provision D) waiver or premium
payor benefit
which of the following riders would NOT cause the death benefit to increase? A) accidental death rider B) payor benefit rider C) guaranteed insurability rider D) cost of living
payor benefit rider
which of the following riders would NOT cause the death benefit to increase? A) accidental death rider B) payor benefit rider C) guaranteed insurability rider D) cost of living rider
payor benefit rider
A couple owns a life insurance policy with a Children's Term rider. Their daughter is reaching the maximum age of dependent coverage, so she will have to convert to permanent insurance in the near future. Which of the following will she need to provide for proof of insurability? A) proof of insurability is not required B) medical exam C) her parents federal income tax receipts D) medical exam and parents medical history
proof of insurability is not required
When a whole life policy lapses or is surrendered prior to maturity, the cash value can be used to A) pay back all premiums owed plus interest B) receive payments for a fixed amount C) purchase a single premium policy for a reduced face amount D) purchase a term rider to attach to the policy
purchase a single premium policy for a reduced face amount
an insured pays $1,200 annually for her life insurance premium. the insured applies this years $300 worth of accumulated dividends to the next years premium, thus reducting it to $900. what option does this describe? A) accumulation at interest B) cash option C) flexible premium D) reduction of premium
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? A) reduction of premium B) paid-up addition C) accumulation at interest D) cash option
reduction of premium
An insured committed suicide one year after his life insurance policy was issued. The insurer will A) pay nothing B) refund the premiums paid C) pay the policy cash value D) pay the full death benefit to the beneficiary
refund the premiums paid
An insured will be allowed to reactivate her lapsed life insurance policy if action is taken within a certain period of time, and proof of insurability is provided. Which policy provision allows this? A) grace period B) reinstatement provision C) waiver of premium provision D) incontestable clause
reinstatement provision
when an insured under a life insurance policy died, the designated beneficiary received the face amount of the policy, as well as a refund of all of the premiums paid. which rider is attached to the policy? A) accidental death B) return of premium C) cost of living D) decreasing term
return of premium
a policyowner who is also the insured wants to name her husband as the beneficiary of her life policy. she also wishes to retain all of the rights of ownership. the policy should have her husband named as the A) contingent beneficiary B) irrevocable beneficiary C) revocable beneficiary D) secondary beneficiary
revocable beneficiary
which of the following statements about a suicide clause in a life insurance policy is TRUE? A) suicide is covered as long as the policy is in force B) suicided is excluded as long as the policy is in force C) suicide is excluded for a specific period of years and covered thereafter D) suicide is covered for a specific period of years and excluded thereafter
suicide is excluded for a specific period of years and covered thereafter
Children's riders attached to whole life policies are usually issued as what type of insurance? A) adjustable life B) whole life C) term D) variable life
term
Nonforfeiture values guarantee which of the following for the policyowner? A) that the policy premiums will never increase B) that the cash value will not be lost C) that the dividends will be paid annually D) that the death benefit will be paid in a lump sum
that the cash value will not be lost
If a policy has an automatic premium loan provision, what happens if the insured dies before the loan is paid back? A) the policy beneficiary take over the loan B) the policy is rendered null and void C) the balance of the loan will be taken out of the death benefit D) the policy beneficiary receives the full death benefit
the balance of the loan will be taken out of the death benefit
If a life insurance policy has an irrevocable beneficiary designation, A) the owner can always change the beneficiary at will B) the beneficiary cannot be changed C) the beneficiary can only be changed with written permission of the beneficiary D) the beneficiary cannot be changed for atleast 2 years
the beneficiary can only be changed with written permission of the beneficiary
what is NOT true about beneficiary designations? A) the beneficiary must have insurable interest in the insured B) the beneficiary may be a natural person C) the policy does not have a beneficiary named in order to be valid D) trusts can be valid beneficiaries
the beneficiary must have insurable interest in the insured
upon the death of the insured, the primary beneficiary discovers that the insured chose the interest only settlement option. what does this mean? A) the primary beneficiary will receive the death benefit and the secondary beneficiaries will share the interest payments B) the beneficiary will only receive payments of the interest earned on the death benefit C) the beneficiary must pay interest to the insurer D) the beneficiary will receive the lump sum, plus interest
the beneficiary will only receive payments of the interest earned on the death benefit
In a case where the primary beneficiary predeceases the insured, in the event of the insured's death, the death benefit proceeds will be paid to A) the insurance company B) the contingent beneficiary C) the insureds spouse D) the policyowner
the contingent beneficiary
if an insured withdraws a portion of the face amount in the form of accelerated benefits because of a terminal illness, how will that affect the payable death benefit from the policy? A) the death benefit will be smaller B) the death benefit will be forfeited C) the death benefit will be the same as the original face amount D) the death benefit will be larger
the death benefit will be smaller
the insured has his wife names as the beneficiary of his life insurance policy. to ensure that his wife had income for life after the insureds death, he chose the life income settlement option. the amount of payments will be determined by taking into account of the following EXCEPT A) projected interest rates B) face amount of the policy C) the insureds age at death D) the beneficiary's life expectancy
the insureds age at death
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? A) the premiums will become tax deductible until the insured 18th birthday B) since it is the Policyowner, and not the insured, who has become disabled, the life insurance policy will not be affected C) the insured will have to pay premiums for 6 months. if at the end of this period the father is still disabled the insured will be refunded the premiums D) the insureds premiums will be waived until she is 21
the insureds premiums will be waived until she is 21
all of the following are TRUE statements regarding the accumulation at interest option EXCEPT A) the policyholder has the right to withdraw the accumulations at any time B) the interest is not taxable since it remains inside the insurance policy C) the annual dividend is retained by the company D) the interest is credited at a rate specified by the policy
the interest is not taxable since it remains inside the insurance policy
If an insured continually uses the automatic premium loan option to pay the policy premium, A) the cash value will continue to increase B) the insurer will increase the premium amount C) the policy will terminate when the cash value is reduced to nothing D) the face amount of the policy will be reduced by the automatic premium loan amount
the policy will terminate when the cash value is reduced to nothing
all of the following are true regarding the guaranteed insurability rider EXCEPT A) the insured may purchase additional insurance up to the amount specified in the base policy B) the insured may purchase additional insurance up to the amount specified in the base policy C) it allows the insured to purchase additional amounts of insurance without proving insurability only at specified dates or events D) this rider is available to all insureds with no additional premium
the rider is available to all insureds with no additional premium
which is true about a spouse term rider? A) coverage is allowed for an unlimited time B) the rider is decreasing term insurance C) coverage is allowed up to age 75 D) the rider is usually level term insurance
the rider is usually level term insurance
Under an extended term nonforfeiture option, the policy cash value is converted to A) the same face amount as in the whole life policy B) the face amount equal to the cash value C) a lower face amount than the whole life policy D) a higher face amount than the whole life policy
the same face amount as in the whole life policy
which of the following is TRUE about nonforfeiture values? A) they are required by state law be be included in the policy B) they are optional provisions C) a table showing nonforfeiture values for the next 10 years must be included in the policy D) policy owners do not have the authority to decide how to exercise nonforfeiture values
they are required by state. law to be included in the policy
the insured under a $100,000 life insurance policy with a triple indemnity rider for accidental death was killed in a car accident. it was determined that the accident was his fault. the triple indemnity rider in the policy specifies that the death must not be contributed to by the insured in any manner. in this case, what will the policy beneficiary receive? A) $0 B) $50,000(50% of the policy value) C) $100,000 D) $300,000(triple the amount of policy value)
$100,000
an insured purchased a 15 year level term life insurance policy with a face amount of $100,000. the policy contained an accidental death rider, offering a double indemnity benefit. the insured was severely injured in an auto accident, and after 10 weeks of hospitalization, died from the injuries. what amount would his beneficiary receive as a settlement? A) $0 B)$100,000 C)$200,000 D) $100,000 plus the total of paid premium
$200,000
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? A) $ 20,000 B) $ 25,000 C) $ 50,000 D) the face amount will be determined by the insurer
$50,000
what is the waiting period on a waiver of premium rider in life insurance policies? A) 30 days B) 3 months C) 5 months D) 6 months
6 months
Which rider, when attached to a permanent life insurance policy, provides an amount of insurance on every family member? A) spouse rider B) children's rider C) additional insured rider D) family term rider
Family term rider
who can request changes in premium payments, face value, loans, and policy plans? A) policyowner B) contingent beneficiary C) beneficiary D) producer
Policyowner
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? A) the wife of the deceased insured B) the former wife of the deceased insured C) a minor son of the insured D) a business partner of the insured
a minor son of the insured
If the policyowner, the insured, and the beneficiary under a life insurance policy are three different people, who has the ownership rights? A) policyowner B) the insured and the policyowner C) beneficiary D) insured
the Policyowner
which of the following statements is TRUE concerning irrevocable beneficiaries? A) they must be changed at any time B) they can never be changed C) they may be changed only on the anniversary date of the policy D) they can be changed only with the written consent of the beneficiary
they can be changed only with the written consent of that beneficiary
what is the purpose of a fixed period settlement option? A) to provide a guaranteed income for a certain amount of time B) to settle the insurance company liability C) to provide a guaranteed income for life D) to provide a guaranteed amount of money each month
to provide a guaranteed income for a certain amount of time
The paid-up addition option uses the dividend A) to reduce the next years premiums B) to accumulate additional savings for retirement C) to purchase a smaller amount of the same type of insurance as the original policy D) to purchase a one-year term insurance in the amount of the cash value
to purchase a smaller amount of the same type of insurance as the original policy
The rider in a whole life policy that allows the company to forgo collecting the premium if the insured is disabled is called A) waiver of cost of insurance B) payor benefit C) waiver of premium D) guaranteed insurability
waiver of premium
What is the name of the clause that is included in a policy that limits or eliminates the death benefit if the insured dies as a result of war or while serving in the military? A) hazardous occupation B) war or military service C) limited benefit D) aviation
war or military service
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? A) $0 B) $200 C) $9850 D) $10,000
$9800
for how long is an insurance company allowed to defer policy loan requests? A) 30 days B) 60 days C) 6 months D) 1 year
6 months
j applied for a life insurance policy one January. the policy was issued January 31. j's agent was vacationing at the time the policy was issued, so j did not receive the policy until February 18. j decides that he does not want the policy. when would j need to return to the insurer in order to receive a full refund of premium paid? A) February 28th, or 10 days after the time the policy is delivered B) the time varies from one policy to another C) it was already to late when j received the policy because the 10-day free-look period has expired D) anytime, because the agent did not deliver the policy promptly
February 28th or 10 days after the time the policy is delivered
which of the following premium payment modes will incur the lowest overall payment? A) annual B) semi annual C) quarterly D) monthly
annual
a Policyowner fails to pay the premium due on his whole life policy after the grace period passes, but the policy remains in force. this is due to what provision? A) waiver of premium B) incontestability period C) assignment D) automatic premium loan
automatic premium loan
Under which nonforfeiture option does the company pay the surrender value and have no further obligations to the policyowner? A) paid up option B) extended term C) cash surrender D) reduced paid up
cash surrender
which of the following components must a life insurance policy have to allow policy loans A) cash value B) dividends C) flexible premiums D) face amount
cash value
a business owner was trying to obtain a bank loan to fund the purchase of a new business facility, but the bank required proof of additional assets to secure the loan. the business owner then decided to use her $250,000 life insurance policy to secure the loan. which provision make this possible? A) ownership provision B) collateral assignment C) insurable interest D) modification clause
collateral assignment
An insured and his wife are both involved in a head-on collision. The husband dies instantly, and the wife dies 15 days later. The company pays the death benefit to the estate of the insured. This indicates that the life insurance policy had what provision? A) survivor life B) second to die C) common disaster D) accidental death
common disaster
An insured pays an annual premium to his insurer. In return, the insurer promises to pay benefits in accordance with the terms of the contract. This is called A) consideration B) conditions C) utmost good faith D) acceptance
consideration
what happens when a policy is surrender for its cash value? A) the policy can be reinstated by paying back all policy loans and premiums B) the policy can be converted to term coverage C) coverage ends and the policy cannot be reinstated D) coverage ends but the policy can br reinstated at any time
coverage ends and the policy cannot be reinstated
which of the following is NOT typically excluded from life policies? A) death due to plan crash for a fare paying passenger B) self inflicted death C) death that occurs while a person is committing a felony D) death die to war or military service
death due to plane crash for a fare paying passenger
all of the following statements concerning dividends are true EXCEPT A) favorable investment results generate higher dividends B) dividend amounts are guaranteed in the policy C) lower insurance company costs generate higher dividends D) they stem from favorable underwriting experience
dividend amounts are guaranteed in the policy
The provision which states that both the policy and a copy of the application form the contract between the policyowner and the insurer is called the A) total contract B) aleatory contract C) complete contract D) entire contract
entire contract
Items stipulated in the contract that the insurer will not provide coverage for are found in the A) exclusion clause B) insuring clause C) benefit payment clause D) consideration clause
exclusion clause
an insured purchased a life policy on his life naming his wife as primary beneficiary, and his daughter as contingent beneficiary. under what circumstances could the daughter collect the death benefit? A) if the insured died from accidental means B) if the primary beneficiary predeceased the insured C) when the insured dies, the primary and contingent beneficiaries share death benefit equally D) with the primary beneficiary written consent
if the primary beneficiary predeceased the insured
which of the following policy components contains the company's promise to pay? A) entire contract provision B) insuring clause C) premium mode D) owners rights
insuring clause
which of the following applies to the 10 day free look privilege? A) it allows the insured 10 days to pay the initial premium B) it can be waived only by the insurance company C) it is granted only at the option of the agent D) it permits the insured to return the policy for a full refund of premiums paid
it permits the insured to return the policy for a full refund of premiums paid
which of the following explains the policy owners right to change beneficiaries, choose options, and receive proceeds of a policy? A) the entire contract provision B) the consideration clause C) assignment rights D) owners rights
owners rights
An insured has had a life insurance policy that he purchased 3 years ago when he was 40 years old. He is killed in an automobile accident and it is discovered that he is actually 45 years old, and not 43, as stated on the application. What will the company do? A) pay nothing, there was a misrepresentation on the application B) pay the full death benefit and refund excess premium C) pay a reduced death benefit D) pay the full death benefit
pay a reduced death benefit
An insured purchased a life insurance policy in 2010 and died in 2017. the insurance company discovers at that time the insured had misstated information during the application process. what can they do? A) refuse to pay the death benefit of the misstatement on the application pay a decreased death benefit C) sue for the right to not pay the death benefit D) pay the death benefit
pay the death benefit
which life insurance option provides coverage for the longest period of time? A) accumulated at interest B) reduced paid up C) extended term D) paid up option
reduced paid up
The Ownership provision entitles the policyowner to do all of the following EXCEPT A) receive a policy loan B) assign the policy C) designate a beneficiary D) set premium rates
set premium rates
which of the following determines the length of time that benefits will be received under the fixed amount settlement option? A) amount of interest B) size of each installment C) predetermined length of time stated in the contract D) length of income period
size of each installment
which of the following, when attached to a permanent life insurance policy, allows the Policyowner to customize the policy to provide an additional amount of temporary insurance on the insured, or allows amounts of temporary insurance to cover other family members? A) accidental death and dismemberment rider B) guaranteed insurability rider C) change of insured rider D) term rider
term rider
which of the following information will be stated in the consideration clause of a life insurance policy? A) the time period allowed for the payment of premium B) the conditions for insurability C) the amount of premium payment D) the parties to the contract
the amount of premium payment
The sole beneficiary of a life insurance policy dies before the insured. If the policyowner does not amend the beneficiary designation, what will happen to the policy's death benefit? A) the state B) the beneficiary estate C) the insureds estate D) probate
the insured estate
when a life insurance policy was issued, the Policyowner designated a primary and a contingent beneficiary. several years later, both the insured and the primary beneficiary died in the same car accident, and it was impossible to determine who died first. which of the following would receive the death benefit? A) he insurance company B) in insureds estate C) the primary beneficiary estate D) the insureds contingent beneficiary
the insureds contingent beneficiary
if an insured under a variable life insurance policy dies, how will the insurer respond to outstanding policy loans? A) the loan amount are deducted from the death benefit B) the policy is withheld until payments are met C) the loan amount is charged to the beneficiaries D) the loans are waived
the loan amounts are deducted from the death benefit
what is the purpose of a suicide provision within a life insurance policy? A) to protect the policyowner B) to protect the insurer from persons who purchase life insurance with the intention of committing suicide C) to limit the insurers liability after the 2 year waiting period D) to deter the Policyowner from committing suicide
to protect the insurer from persons who purchase life insurance with the intention of committing suicide
an absolute assignment is a A) change of insurer B) transfer of all ownership rights in a policy C) transfer of some ownership rights in a policy D) change of beneficiary
transfer of all ownership rights in a policy
