Life Insurance Policies - Provisions, Options and Riders - 2

An insurer will accept a premium from the insured and continue the coverage in full force as though it was NOT late during which time period? Incontestable period Probation period Reinstatement period Grace period

Grace period

Which of these is NOT considered to be a nonforfeiture option in a whole life insurance policy? Interest only Reduced paid-up insurance Extended term insurance Cash surrender

Interest only

Which of these is NOT considered to be a common life insurance nonforfeiture option? Cash surrender Extended term insurance Reduced paid-up insurance Life income annuity

Life income annuity

What is an insurer required to do when faced with an error made under the Misstatement of Age provision? Cancel the policy Pay age-corrected benefits Pay full benefits as stated in the policy Bill the policyowner for back premiums

Pay age-corrected benefits

Which type of rider will waive the premium on a child's life insurance policy if the parent paying the premium dies? Waiver of premium Juvenile waiver Guaranteed insurability Payor benefit

Payor benefit

What is an insurance policy's grace period? Period of time after the initial premium is paid and before the policy is issued Period of time it takes for a policy's underwriting to complete Period of time after a policy is issued and before it is delivered to policyowner Period of time after the premium is due but the policy remains in force

Period of time after the premium is due but the policy remains in force

Which situation accurately describes a reduced paid-up nonforfeiture option? Policy has a decreased face amount Face amount of the new policy equals that of the original policy Cash value is surrendered to policyowner Premiums must continue to be paid

Policy has a decreased face amount

All of the following are considered to be nonforfeiture options available to a policyowner EXCEPT Extended Term Insurance Cash Surrender Reduction of Premium Reduced Paid-Up Insurance

Reduction of Premium

A policyowner may exercise which of these dividend options that uses the dividend to pay all or part of the next premium due? Reduction of premium dividend option Extended term option Paid-up option Cash dividend option

Reduction of premium dividend option

Kurt is an active duty serviceman who was recently killed in an accident while home on leave. Which military service exclusion clause would pay upon his death? Active Status Results Leave

Results

Which of these is NOT a characteristic of the Accelerated Death Benefit option? The face amount and policy premium are not affected by the payment Before payment of the benefit is made, specific conditions must exist, such as suffering from a terminal illness There may be a dollar limit on the maximum benefit The benefit can be offered as a rider at a specific extra cost or may be at no cost

The benefit can be offered as a rider at a specific extra cost or may be at no cost

James is the insured on a life insurance policy where his age was misstated on the application. Which of the following is CORRECT regarding the death benefit amount? The original face amount will be paid to the beneficiary The policy will be voided with no death benefits paid The death benefit paid will be what the premium would have purchased at the correct age The amount of premiums paid will be returned with interest

The death benefit paid will be what the premium would have purchased at the correct age

The double indemnity provision in a life insurance policy pertains to an insured's death caused by a(n) sickness suicide accident war

accident

A provision that allows a policyowner to temporarily give up ownership rights to secure a loan is called a(n) automatic premium loan nonforfeiture option collateral assignment irrevocable assignment

collateral assignment

Ownership of a life insurance policy may be temporarily transferred with a(n) collateral assignment absolute assignment transferable assignment beneficiary assignment

collateral assignment

Life insurance policies will normally pay for losses arising from commercial aviation war suicide hazardous jobs

commercial aviation

A waiver of premium rider allows an insured to waive premium payments if the insured is temporarily disabled unemployed completely and permanently disabled experiencing financial hardship

completely and permanently disabled

Matt is applying for life insurance and requests a double indemnity rider. A double indemnity benefit will be payable to Matt's beneficiary if Matt is killed while committing a felony dies of a stroke dies instantly from a car accident is injured in a skiing accident and dies 18 months later

dies instantly from a car accident

All of these are standard exclusions found in a life insurance policy EXCEPT hazardous occupations aviation disability war

disability

A life insurance policy normally contains a provision that restricts coverage in the event of death under all of the following situations EXCEPT fare-paying passenger pilot of personal airplane suicide war

fare-paying passenger

A life insurance rider that allows an individual to purchase insurance as they grow older, regardless of insurability, is called a(n) guaranteed term rider guaranteed insurability rider accelerated benefit rider cost of living rider

guaranteed insurability rider

A guaranteed issue insurance policy has no initial premium requirement incontestable period waiting period medical underwriting

medical underwriting

The suicide clause of a life insurance policy states that if an insured commits suicide within a stated period from the policy's inception, the insurer will only be liable for a return of premiums paid minus indebtedness and with interest during the last 12 months minus indebtedness and without interest during the last 6 months

minus indebtedness and without interest

A provision in a whole life policy that allows a policyowner to terminate the policy in return for a reduced paid-up policy of the same type is called a(n) insuring clause payor provision reinstatement provision nonforfeiture provision

nonforfeiture provision

A provision that allows a policyowner to withdraw a policy's cash value interest free is a(n) partial surrender waiver of premium automatic premium loan grace period

partial surrender

The automatic premium loan provision authorizes an insurer to withdraw from a policy's cash value the amount of any interest payable from an outstanding policy loan balance past due premiums that have not been paid by the end of the grace period the outstanding policy loan balance any surrender charges owed by the policyowner

past due premiums that have not been paid by the end of the grace period

A rider that assures premiums will be paid on a juvenile policy until the child reaches a specific age is called a(n) waiver of premium rider payor rider automatic premium loan rider juvenile waiver rider

payor rider

In order to activate the reinstatement clause of a lapsed life insurance policy, the insured MUST remit all past-due premiums within the grace period provide evidence of insurability to the insurer resubmit a new life insurance application provide a valid reason for the lapse

provide evidence of insurability to the insurer

The two major actions required for a policyholder to comply with the Reinstatement Clause are provide evidence of insurability, agree to a new incontestable period provide evidence of insurability, pay past due premiums pay past due premiums, agree to a new incontestable period pay past due premiums, agree to a reduction in coverage

provide evidence of insurability, pay past due premiums

A life insurance policyowner does NOT have the right to change a beneficiary select a beneficiary take out a policy loan revoke an absolute assignment

revoke an absolute assignment

An insured individual and the policy's beneficiary die from the same accident. The common disaster provision states the insurer will continue as if the insured outlived the beneficiary the beneficiary outlived the insured no beneficiary was ever named the insured and beneficiary died at the same time

the insured outlived the beneficiary

A whole life insurance policy accumulates cash value that becomes the policy loan value which the insured may borrow against the death benefit the source of funding for administration fees a source of funding a term rider to the policy

the policy loan value which the insured may borrow against

If an insured dies during the grace period with no premiums paid the policy would be payable, minus the premium amount the policy would be payable only after the beneficiary makes past due premium payment all past premiums will be refunded with interest the claim would be denied

the policy would be payable, minus the premium amount

Dorian exercised a nonforfeiture option by using his life policy's cash value to purchase an extended term insurance option. When the term insurance expires, he has the option of resuming the original policy and paying the same premium the coverage can be extended with a lump sum payment all remaining cash values are paid to the policyowner the protection ends

the protection ends

Ron has a life insurance policy with a face value of $100,000 and a cost of living rider. If the consumer price index has gone up 4%, how much may Ron increase the face value of the policy? $400 $800 $2,000 $4,000

$4,000

If an insured's age on a life insurance policy has been misstated, what is the insurer's liability if the insured dies? No death benefit is owed because of the misstatement of age The full original death benefit listed on the policy A prorated death benefit based on the amount of insurance the insured's premiums would have been if purchased at the correct age The original death benefit listed on the policy minus any outstanding loans and interest

A prorated death benefit based on the amount of insurance the insured's premiums would have been if purchased at the correct age

Which of these is considered to be a Living Benefit option in a life insurance policy? Reinstatement Waiver of premium Accelerated death benefit Payor benefit

Accelerated death benefit

Which of the following is considered to be an alternative to a life settlement? Accelerated death benefit rider Waiver of premium rider Extended term option Decreasing term insurance

Accelerated death benefit rider

Which dividend option would an insurer invest the policyowner's money and add any interest earnings as the dividends accrue? Accumulation at Interest Option Cash Dividend Option Paid-Up Additions Option One-Year Term Dividend Option

Accumulation at Interest Option

Of the following dividend options, which of these is taxable? Reduction of premium One year term Paid-up additions Accumulation at interest

Accumulation at interest

An error was made on Mary's life insurance application. Which of the following areas are errors commonly made on applications for which the incontestable clause does NOT apply? Marital status Age Address Income

Age

In what part of an insurance policy are policy benefits found? Declarations Entire contract Waivers Conditions

Declarations

What is the name of the provision which states that a copy of the application must be attached to the policy when issued? Policy Summary Buyer's Guide Entire Contract Entire Policy

Entire Contract

Which of these would limit a company's liability to provide insurance coverage? Waiver Exclusion Rider Provision

Exclusion

Which of the following protects a policyowner from a misrepresentation caused by an innocent mistake? Reinstatement clause Entire Contract clause Incontestable clause Nonforfeiture clause

Incontestable clause

Joanne has a $100,000 whole life policy with an accumulated $25,000 of cash value. She would like to borrow $15,000 against the cash value. Which of the following statements is TRUE? Net death benefit will be reduced if the loan is not repaid No interest will be charged on loan balance Term life policies are the only type of insurance that allows policy loans A loan can be taken out for up to the face amount of the policy

Net death benefit will be reduced if the loan is not repaid

All of the following riders can increase the death benefit amount EXCEPT Cost of Living Waiver of Premium Accidental Death Rider Guaranteed Insurability

Waiver of Premium

All of these are common exclusions to a life insurance policy EXCEPT accidental death military service aviation hazardous occupations

accidental death

All of these are valid options for what a policyowner may do with policy dividends EXCEPT cash outlay to the policyowner accumulate without interest reduction in policy premium buy additional insurance coverage

accumulate without interest

The free-look provision gives the policyowner the right to return the policy for a partial refund within a specified number of days the right to contest the terms of the policy the right to change a policy provision the right to return the policy for a full refund within a specified number of days

the right to return the policy for a full refund within a specified number of days

Loans obtained by a policyowner against the cash value of a life insurance policy are treated as taxable income would not be treated as taxable income are limited by the face amount of the policy would be subject to a Federal estate tax

would not be treated as taxable income