Life and Health Insurance Exam (3~

which is true about beneficiary designations?

- trusts can be valid beneficiaries - the beneficiary may be a natural person - the policy does not have to have a beneficiary named in order to be valid

Under which of the following circumstances would an insurer pay accelerated benefits?

an insured is diagnosed with cancer and needs help paying for her medical treatment

which premium payment mode will incur the lowest overall payment

annual

which of the following protects the insured from an unintentional policy lapse due to a nonpayment of premium?

automatic premium loan

Under which non-forfeiture option does the company pay the surrender value and have no further obligations to the policy owner?

cash surrender

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

consideration

insuring clause

contains the company's promise to pay

according to the entire contract provision, what document must be made part of the insurance policy?

copy of the original application

The provision which states that both the policy and a copy of the application form the contract between the policy owner and the insurer is called the

entire contract

which nonforfeiture option has the highest amount of insurance protection?

extended term

Which rider, when attached to a permanent life insurance policy, provides an amount of insurance on every family member?

family term rider

if a life policy allows the policy owner to make periodic additions to the face amount at standard rates, without proving insurability, the policy includes a

guaranteed insurability rider

an insured purchased a life insurance 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?

if the primary beneficiary predeceases the insured

Life income joint and survivor settlement option guarantees

income for 2 or more recipients until they die

what type of insurance would be used for a return of premium rider?

increasing term - when added to a whole life policy it provides that at death prior to a given age, not only is the original face amount payable, but also all premiums previously paid are payable to the beneficiary

When a reduced-paid up nonforfeiture option is chosen, what happens to the face amount of the policy?

it is reduced to the amount of what the cash value would buy as a single premium

which of the following applies to the 10-day free-look privilege?

it permits the insured to return the policy for a full refund of premiums paid.

which of the following is true about the premium on the children's rider in a life insurance policy

it remains the same no matter how many children are added to the policy.

A policy assignment....

it transfers rights of ownership from the owner to another person

the type of settlement option which pays throughout the lifetimes of two or more beneficiaries is called

joint and survivor

interest only

settlement option

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

the contingent beneficiary

a policyowner designated a primary and a contingent beneficiary. they both died in the same car accident and it was impossible to determine who died first. who would receive the death benefit

the insured's contingent beneficiary - uniform simultaneous death law: the law will assume that the beneficiary dies first in a common disaster. this provides that the proceeds will be paid to the contingent beneficiary or to the insured's estate if none is designated

a 40 year old man buys a whole life policy and names his wife as his only beneficiary. His wife dies 10 years later. he never remarries and dies at age 61, leaving 2 grown-up children. assuming he never changed the beneficiary the policy proceeds will go to...

the insured's estate

if the policy owner, the insured, and the beneficiary under a life insurance policy are three different people, who has the ownership rights?

the policy owner

which is true about a spouse term rider?

the rider is usually level term insurance

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

the same face amount as in the whole life policy

All of the following statements concerning dividends are true:

- Lower insurance company costs generate higher dividends. - They stem from favorable underwriting experience. - Favorable investment results generate higher dividends. - Dividend amounts are NOT guaranteed in the policy.

dividend options

- accumulated at interest - reduction of premium - paid-up additions

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?

fixed 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

guaranteed insurability

an individual is purchasing a permanent life insurance policy with a face value of 25,000 but would like the option to add additional coverage in the future.

guaranteed insurability option

An insured has chosen joint and 2/3 survivor as the settlement option. What does this mean to the beneficiaries?

the surviving beneficiary will continue receiving 2/3 of the benefit paid when both beneficiaries were alive

nonforfeiture values

they are required by state law to be included in the policy - reduced paid up - cash surrender - extended term

concerning irrevocable beneficiaries...

they can be changed only with the written consent of that beneficiary

what is the waiting period on a waiver of premium rider in life insurance policies?

6 months

what is the term for how frequently a policy owner is required to pay the policy period

mode

a rider attached to a life insurance policy that provides coverage on the insured's family members is called the

other-insured rider

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 to pay the policy up early?

paid up option

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 optioon

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 premiums paid. which rider is attached to the policy?

return of premium

Children's riders attached to whole life policies are usually issued as what type of insurance?

- term - expires when the minor reaches a certain age

under an accumulation at interest option

- the annual dividend is retained by the company - the interest is creditated at a rate specified by the policy - the policy holder has the right to withdraw the accumulations at any time - the interest is taxable

guaranteed insurability rider

- the insured may purchase additional coverage at the attained age - the insured may purchase additional insurance up to the amount specified in the base policy - only at specified dates/events - expires at the insured's age 40

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?

100,000

which of the following, when attached to a permanent life insurance policy, allows the policy owner to customize the policy to provide an additional amount of temporary insurance on the insured, or allows amounts of temporary insurance to cover the other family members?

term rider

the validity of coverage under a life insurance policy may not be contested, except for nonpayment of premium, after the policy has been in force for at least how many years?

2 years

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 about would his beneficiary recieve?

200,000. - only get double or triple if it is an accident as defined in the policy and occurs within 90 days of such an accident

what is the name of a 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?

military service or war

which of the following explains the policy owner's right to change beneficiaries, choose options, and receive proceeds of a policy?

owner's rights

which of the following statements about a suicide clause in a life insurance policy is true?

suicide is excluded for a specified period of years and covered thereafter

the interest earned on policy dividends is

taxable

a fathers 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. the premiums will be waived is the father is disabled for more than 6 months

the following riders would cause the death benefit to increase:

- guaranteed insurability - cost of living - accidental death

which of the following is typically excluded from life policies

- self-inflicted death - death that occurs while a person is committing a felony - death due to war or military service

an insured owns a $500,000 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

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

life income - provides the recipient with an income that he or she cannot outlive - pays the benefit while the beneficiary is alive; however the payments stop at the beneficiary's death

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?

life income with period certain