Life Insurance module 3

The agreement in a life insurance contract that states a specific sum of money will be to a designated person upon a an insureds death is called an

Insuring agreement

B receives yearly dividends and interest from a participating life insurance policy. Which of these should B include as gross income for federal income tax purposes?

Interest only

Accidental Death and Dismemberment(AD&D) provision in a life insurance policy would pay additional benefits if the insured

Is blinded in an accident

Which of the following statements about accumulated interest earned on dividends from an insurance policy is true?

It is taxed as ordinary income

A return of premium life insurance policy is

Whole life and Increasing term

T took out a $50,000 life insurance policy with an Accidental Death and Dismemberment rider. Five years later, T commits suicide. How much will the insurer pay?

$50,000

An insurer may normally delay the payment of a cash value loan or surrender value for up to

6 months

A policyowner may generate taxable income from which of the following Dividend Options?

Accumulation at interest

What action can a policyowner take if an application for a bank loan requires collateral?

Assign policy ownership to the bank

A policy loan is made possible by which of these life insurance policy features?

Cash value provision

Which rider provides coverage for a child under a parent's life insurance policy?

Child term rider

How are surrender charges deducted in a life policy with a rear-end loaded provision?

Deducted when the policy is discontinued

All of these statements about the Waiver of Premium provision are correct EXCEPT

Insured must be eligible for Social Security disability for claim to be accepted

An insured's inability to perform two or more activities of daily living may trigger which type of policy rider?

Long term care

K owns a Whole Life policy. If K wants an increasing Death Benefit to protect against inflation, which Dividend Option should she chose?

Paid-Up Additional Insurance

The ___ has the right to change a life insurance policy's beneficiary

Policy owner

What benefit does the Payor clause on a Juvenile Life policy provide?

Premiums are waived if payor becomes disabled

An rider may be used to include coverage for children under their parents life insurance policy

Term

L takes out a life insurance policy and dies 10 years later. During the claim process, the insurer discovers that L had understated her age on the application. Under the Misstatement of Age provision, the insurer will

adjust the death benefit to a reduced amount

Dividends paid from a life insurance policy are

issued by the insurer