Life and Health license Ch.4
K pays on a $20,000 20-Year Endowment policy for 10 years and dies from an automobile accident. How much will the insurance company pay the beneficiary?
$20,000 death benefit
Industrial life insurance is a form of life insurance written under policies having a face value amount of
$3,000 or less
G purchased a Family Income policy at age 40, The policy has a 20-year rider period. If G were to die at age 50, how long would G's family receive an income?
10 years
What type of policy dpi;d offer a 40-year old the quickest accumulation of cash value?
20 payment life
how long is the grace period for ordinary insurance?
30 days
What advantage does an equity-indexed life insurance policy have over a variable life policy?
A minimum guaranteed rate of return
Cash Surrender Option
A nonforfeiture option that allows whole life insurance policy owners to receive a payout of their policy's cash values.
Life insurance that allows the death benefit to be modified is known as:
Adjustable life
Waiver of Premium Rider
Allows the policyowner to waive premium payments during a disability and keeps the policy in force. It does not provide cash payments to the policyowner. The disability must be total and permanent and have sustained through the waiting period (90 days or 6 months). After a certain age (usually 60 or 65), the waiver of premium rider is void.
The consideration clause in a lifetime insurance contracts contains what pertinent information?
Amount of premium payments and when they are due.
What is to be expected of a Modified Life policy?
An eventual change in premium payments
Collateral Assignment
Assignment of a policy to a creditor as security for a debt. The creditor is entitled to be reimbursed out of policy proceeds for the amount owed. The beneficiary is entitled to any excess of policy proceeds over the amount due the creditor in the event of the insured's death.
When a Permanent life insurance policy premiums are stopped, which provision is designed to keep the policy from lapsing?
Automatic Premium Loan
Automatic Premium Loan Provision
Automatically creates a loan using the available cash value to pay the premium
Mortgage protection is usually covered by what type of insurance?
Decreasing term
F needs life insurance that provides coverage for only a limited amount of time with a death benefit that changes regularly according to a schedule. What kind of policy is needed?
Decreasing term policy
A life insurance policy that offers cash value and is influenced by the S&P with a guaranteed minimum rate of return is called:
Equality Index life
which rider allows a policyowner to switch to a new policy in the future if they desire?
Exchange privilege rider
A life insurance policyowner falls behind on his premium payments and dies during the grace period. How will the insurer handle this claim?
Face amount minus the loan balance and past due premium
What kind of insurance policy supplies an income stream over a set period of time that starts when the insured dies?
Family maintenance policy
What type of life insurance policy covers a husband and wife as well as any future children for no additional premium?
Family plan policy
When a premium payment for a life insurance policy is missed, what provision will dictate the actions taken by the insurer?
Grace period provision
A Modified Life policy has similar characteristics and serves the same purpose as
Graded Premium Whole Life
The type of life policy best suited to cover a husband and wife for mortgage protection would be
Joint life
Which type of life insurance is characterized as having two insureds and matures when the first insured dies?
Joint life
what type of life insurance is characterized as having two insureds and matures when the first insured dies?
Joint life
A life insurance policy that fails the 7pay test is considered to be a Modified Endowment Contract. This type of policy will:
Lose certain tax advantages
Life insurance that does NOT pass the 7-day test is called a(n)
Modified endowment contract
K buys a policy where the premium stays fixed the first 5 years. The premium then increases in year 6 and stays level thereafter, all the while the death benefit remains the same. What kind of policy is this?
Modified whole life
Which life products are NOT interest sensitive?
Modified whole life
P is the insured on a participating life policy. Which statement is true if P's premiums are waived due to a disability?
P will still receive declared dividends.
A young, married teacher has two children and owns a Whole Life policy. If the teacher wants an increasing Death Benefit to protect against inflation, the teacher should select which of the following Dividend Options?
Paid up additional insurance
which statement is true in regards to a policy loan?
Past-due interest on a policy loan is added to the total debt
Guaranteed Insurability Rider
Permits the policyowner to buy additional permanent life insurance coverage at specific points of time in the future without submitting proof of insurability. It also includes specific events like marriage and births, without requiring the proof of insurability. Usually the benefit is allowed every 3 years, up to the original face amount of the policy.
Absolute assignment
Policy assignment under which the assignee (person to whom the policy is assigned) receives full control over the policy and also full rights to its benefits. Generally, when a policy is assigned to secure a debt, the owner retains all rights in the policy in excess of the debt, even though the assignment is absolute in form.
Which is true concerning a Variable Universal life policy?
Policy owner controls where the investment will go and selects the amount of the premium payment.
Which of these characteristics is consistent with a Straight Whole Life policy?
Premium are payable for as long as there is insurance coverage in force
Which of these can be altered by the policyowner in an adjustable life insurance policy?
Premium payment amount
describe the Straight Whole Life policy
Premiums are payable as long as there is insurance coverage in force
Free Look Period
States the policy owner is permitted a certain number of days once the policy is delivered to look over the policy and return it for a refund of all premiums paid
A husband and wife own a life insurance policy with their son named as beneficiary. The wife dies first, followed by the husband 5 years later. Their son receives the policy's face amount after his father dies. What type of policy was owned?
Survivorship
A life insurance policy that covers multiple insureds and pays the face amount following the death of the last insured is called
Survivorship Life
A husband and wife own a life insurance policy with their son named as beneficiary. The wife dies first, followed by the husband 5 years later. Their son receives the policy's face amount after his father dies. What type of policy was owned?
Survivorship life
What kind of life insurance product covers children Unser their parents policy?
Term rider
Accidental death benefits
The accidental death benefit rider pays an additional sum to the beneficiary if the unsure dies due to a covered accident.
Entire Contract Provision
The entire contract provisions (or clause) states the insurance policy itself, any riders and endorsements/amendments, and the application comprises the entire contract between all parties.
Insuring clause
The insurer's basic promise to pay specified benefits to a designated person in the event of a covered loss.
Suicide Clause
The policy will be voided and no death benefit will be paid if the insured commits suicide within 2 year from policy issuance. The primary purpose of a suicide provision is to protect the insurer against the purchase of a policy in contemplation of suicide.
The initial amount of credit life insurance may not exceed?
The total amount repayable under the contract of indebtedness.
How does a typical Variable Life Policy investment account grow?
Through mutual funds, stocks, and bonds
What type of life insurance are characterized by separate accounts?
Variable
What kind of life insurance offers the policy owner a cash value that is invested in a separate account?
Variable Life
What type of permanent life insurance offers a guaranteed minimum face amount and allows for future increases in coverage?
Variable life policy
All of these insurance products require an agent to have proper FINRA securities registration in order to sell them:
Variable life, universal variable life, variable annuity
A life insurance policy which is characterized by flexible premium payments is called:
Variable universal life
Payor provision
Waives future premiums for a juvenile life insurance policy if the person responsible for paying the premiums dies or becomes disabled.
when is the face amount of a whole policy paid?
When the insured dies or at the policy's maturity date, whichever happens first.
A life insurance policy that provides a policy owner with cash value along with a level face amount is called
Whole life
Q would like to purchase $100,000 of permanent protection on his wife and $50,000 of Term coverage on himself under the same policy. What kind of policy should Q purchase?
Whole life policy with other insured rider
Extended Term Option
a non-forfeiture option in life policies with cash value. It allows the insured to use the cash value to purchase term insurance in the same face amount as the original policy for as long as the cash value will pay the premium
A policyowner who permanently changes the ownership of a life insurance policy is exercising which contractual option?
absolute assignment
All of these are characteristics of an Adjustable Life policy
adjustable premiums, adjustable premium payment period, and combination of term and whole life insurance
Accelerated benefits rider
allows the insured to receive a portion of the death benefit before death if the insured has a terminal illness and is expected to die within 1-2 years. Whatever amount is withdrawn in an accelerated death benefit will decrease the death benefit when death occurs.
Reduced Paid-Up Option
allows the owner to reduce the policy benefit amount in in turn cease making premium payments.
Paid up additions option
allows the policy owner to exchange the dividend for an additional single payment whole life policy
Reduced premiums options
allows the policy owner to return the dividend payment to the insurer in exchange for a reduction in the following years premium payment.
what does the insuring clause in a life insurance contract establish?
an insurers basic promise
Policy Loan (cash withdrawal) Provisions
apply to policies that have cash value also have policy loan and withdrawal provisions. These policies must begin to build cash value after a certain number of years. In most states, this is 3 years. These loans, with interest, cannot exceed the guaranteed cash value or the policy is no longer in force. The policyowner has the right to the policy's cash value. Policy loans are not taxable. Any loans with interest due at the time of death will be deducted from the insured's policy proceeds.
Dividend Options
are the options a policy owner has when receiving dividend payments from an insurance policy.
Nonforfeiture Options
are the options you have for cash value if you terminate a policy that has a cash value.
A Waiver of Premium benefit for a life insurance policy is utilized when the insured
becomes completely disabled
which provision allows the policyowner to change a term life policy to a permanent?
conversion
Which of these types of policies may NOT have the Automatic Premium Loan provision attached to it?
decreasing term
Dependent Riders
dependents may be added to as additional insureds through the use of a dependent rider. other insured riders are typically used for spouses and children
An insured is past due on his life insurance premium, but is still within the Grace Period. What will the beneficiary receive if the insured dies during this Grace Period?
full face amount minus any past due premiums
Which rider allows the policyowner to purchase additional amounts of whole life insurance at certain points in the future?
guaranteed insurability option rider
In a life insurance contract, an insurance company's promise to pay stated benefits is called the:
insuring clause
Reinstatement Provision
is putting a lapsed policy back in force by producing satisfactory evidence of insurability and paying nay past-due premiums required.
Variable Whole Life Insurance can be described as
it is a combination of an endowment and a Increasing Term Policy; both an insurance and securities product
A Survivorship Life policy's proceeds are typically used to
pay estate taxes
A rider that is normally associated with a Juvenile Life policy is called a
payor benefit
A provision in a life insurance policy that pays the policyowner an amount that does not surpass the guaranteed cash value is called the
policy loan provision
the dividend option which reduces the annual premium payment of a life insurance policy is called?
reduction of premium dividend option
Consideration Clause
states a policyowner must pay a premium in exchange for the insurer's promise to pay benefits. A policyowner's consideration consists of completing the application and paying the initial premium. The amount and frequency of premium payments are contained in the consideration clause. "Please CONSIDER me for insurance. Here is my COMPLETED APPLICATION, INITIAL PREMIUM, and how much, how often I agree to pay. Please consider me."
Accumulate Interest Option
the accumulate interest dividend option allows the policy owner to leave dividends with the insurer to accumulate interest. The policy owner will have to pay taxes.
Incontestable Provision (Period)
the incontestable provision states that the insurance company may not challenge the validity of the policy. once the policy has been in force for a period of time, typically two years.
Return of Premium Rider
the total amount of premiums paid into the policy in addition to the face value, as long as the insured dies within a specific period specified in the policy.
When is the face amount paid under a Joint Life and Survivor policy?
upon death of the last insured
what type of life insurance are characterized by senate accounts?
variable
