Life Insurance Policies - Provisions, Options and Riders

S buys a $50,000 whole life policy with a $50,000 Accidental Death and Dismemberment rider. S dies 1 year later of natural causes. How much will the insurer pay the beneficiary?

$50,000 Only because of the rider

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

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

A potential client, age 40, would like to purchase a Whole Life policy that will accumulate cash value at a faster rate in the early years of the policy. Which of these statements made by the producer would be correct?

20-Pay Life accumulates cash value faster than Straight Life

What type of policy would offer a 40-year old the quickest accumulation of cash value?

20-pay life

N is a 40-year old applicant who would like to retire at age 70. He is looking to buy a life insurance policy with level premiums, permanent protection, and be paid-up at retirement. Which of these should N purchase?

30 Pay Life

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

A cash value provision

Which of these is an element of a Variable Life policy?

A fixed, level premium

P is blinded in an industrial accident. Which provision of his life insurance policy will pay a stated benefit amount?

Accidental Death and Dismemberment provision

S is covered by a whole life policy. Which insurance product can cover his children

Child term rider

N is covered by a Term Life policy and does not make the required premium payment which was due August 1. N dies September 15. What action will the insurer take?

Claim will be denied

Which of the following features of a group Term Life policy enables an individual to leave the group and continue his or her insurance without providing evidence of insurability?

Conversion privilege

When a policyowner exchanges a term policy for a whole life policy without providing proof of good health, which of these apply?

Conversion provision

Additional coverage can be added to a Whole Life policy by adding a(n)

Decreasing Term Rider

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

Which of these statements about a Guaranteed Insurability Option rider is NOT TRUE?

Evidence of insurability is required when the option is exercised

D is the policyowner and insured for a $50,000 life insurance policy. The beneficiary is D's wife. D and his wife divorce and D remarries, transferring ownership of his policy to his new wife. If D dies without making any further changes, to whom will the policy proceeds be paid to?

Ex-Wife

Which of these statements describe a Modified Endowment Contract (MEC)?

Exceeds the maximum amount of premium that can be paid into a policy and still have it recognized as a life insurance contract

Term insurance has which of the following characteristics?

Expires at the end of the policy period

What does a Face Amount Plus Cash Value Policy supposed to pay at the insured's death?

Face amount plus the policy's cash value

What kind of insurance policy supplies an income stream over a set period of time that starts when the insured dies?

Family Maintenance Policy

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

In a Life insurance contract, an insurance company's promise to pay stated benefits is called the

Insuring Clause

Which of the following statements about a Variable Whole Life policy is CORRECT? *

It provides a minimum guaranteed Death benefit

D needs life insurance that provides coverage for only a limited amount of time while also paying the lowest possible premium. What kind of policy is needed?

Level Term

Which of these would be considered a Limited-Pay Life policy?

Life Paid-Up at Age 70

Life insurance that covers an insured's whole life with level premiums paid over a limited time is called

Limited Pay life

Life insurance that covers an insured's whole life with level premiums paid over a limited time is called

Limited-Pay Life

K buys a policy where the premium stays fixed for 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

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

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

Which is true concerning a Variable Universal Life policy?

Policyowner controls where the investment will go and selects the amount of the premium payment

The provision that can be used to put an insurance policy back in force after it has lapsed due to nonpayment is called

Reinstatement

J let her life insurance policy lapse 8 months ago due to nonpayment. She can reestablish coverage under which of the following provisions?

Reinstatement Provision

T has a term policy that allows him to continue the coverage after expiration of the initial policy period. What type of term coverage is this?

Renewable

What type of life policy covers two people and pays upon the death of the last insured?

Survivorship

What type of life insurance gives the greatest amount of coverage for a limited period of time?

Term life

Which of these types of life insurance allows the policyowner to have level premiums and to also choose from a selection of investment options?

Variable Life

Which type of life policy contains a monthly mortality charge as well as self-directed investment choices?

Variable Universal Life

When is the face amount of a Whole Life policy paid?

When the insured dies or at the policy's maturity date, whichever happens first

How long does the coverage normally remain on a limited-pay life policy?

age 100

The automatic premium loan provision is designed to

avoid a policy lapse

Additional coverage can be added to a Whole Life policy by adding a(n)

decreasing term rider

term insurance has which of the following characteristics?

expires at the end of the policy period

Credit Life insurance is

issued in an amount not to exceed the amount of the loan

A Limited-Pay Life policy has

premium payments limited to a specified number of years

The investment gains from a Universal Life Policy usually go toward

the cash value

The amount of coverage on a group credit life policy is limited to

the insured's total loan value

How does a typical Variable Life Policy investment account grow?

through mutual funds stocks and bonds

what type of life insurance incorporates flexible premiums and an adjustable death benefit?

universal life

When is the face amount paid under a Joint Life and Survivor policy?

upon death of the last insured

Which policy requires a producer to register with the National Association of Securities Dealers (NASD) before selling?

variable life