life policy options, provisions and exclusions

what is the waiting period on a Waiver of Premium rider?

6 months

two types of assignments are

absolute and collateral

what happens when a policy it's surrendered for its cash value

coverage ends and the policy cannot be reinstated

what provision in a life insurance policy extends coverage beyond the premium due date?

grace period

if an insured receives accelerated death benefits, what is the least amount of the original benefit that the beneficiary would receive after the insureds death?

0%

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

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

automatic payment loan

a policy owner fails to pay the premium due on his whole life policy after the grace period passes but the policy remains in force. this is due to what provision

automatic premium loan

which of the following best describes fixed-period settlement option?

both the principal and interest will be liquidated over a selected period of time

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

guaranteed insurability rider

what policy component contains the company's promise to pay?

insuring clause

which two terms are associated directly with the premium

level or flexible - level is where the premium payment never changes flexible is found in universal life policies where the insured changes their premium payment

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

an insured has had a life insurance policy that he purchased 3 years ago when he was 40 years old. He is killed in an automobile accident and it is discovered that he is actually 45 and not 43 as stated on the application. What will the company do?

pay a reduced benefit

when a whole life policy lapses or is surrendered prior to maturity, the cash value can be used to

purchase a single premium policy for a reduced face amount

the policy owner pays for her life insurance annually. until now, she has collected a nontaxable dividend check each year. she has decided that she would rather use the dividends to help pay for her next premium. what option would allows her to do this?

reduction of premium - this option allows the policy owner to apply policy dividends toward the next years premium

the accelerated death benefits provision will pay for an early payment of the death benefit when the insured is

terminally ill

nonforfeiture values guarantee which of the following for the policy owner?

that the cash value will not be lost

upon the death of the insured, the primary beneficiary discovers that the insured chose the interest only settlement option. what does this mean?

the beneficiary will only receive payments of the interest earned on the death benefit

what is the advantage of reinstating a policy instead of applying for a new one?

the original age is used for premium determination

cash payment option is also known as

lump sum

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 injuries. What amount would his beneficiary receive as a settlement?

200,000

which provision of a life insurance policy states the insurers duty to pay benefits upon the death of the insured and to whom the benefits will be paid?

insuring clause

the policy owner wants to make sure that upon his death, the life policy will pay a portion of the proceeds annually to his spouse, but that the principal will be paid to their children when they reach a certain age. Which settlement option should the policy owner choose?

interest only option - the insurance company retains the policy proceeds and pays interest on the proceeds to the recipient at regular intervals

which of the following is true regarding the reinstatement provision

it requires the policy owner to pay all overdue premiums 27th interest before the policy is reinstated

which rider does not cause the death benefit to increase?

payor benefit rider

which statement is false regarding accumulation at interest option

the interest is not taxable since it remains inside the insurance policy.... the interest credited under this option IS taxable whether or not the policy owner receives it

an individual is purchasing a permanent life insurance policy with a face value of 25,000. while this is all the insurance that he can afford at this time, he wants to be sure that additional coverage will be available in the future. Which of the following options should be included in the policy?

Guaranteed Insurability option

The insured had his wife named as the beneficiary of his life insurance policy. To ensure that his wife had income for life after his death, he chose the life income settlement option. The amount of payments will be determined by taking into account all of the following EXCEPT

the insureds age at death

the rider in a whole life policy that allows the company to forgo collecting the premium if the insured is disabled is called

waiver of premium

which of the following is true regarding nonforfeiture options

they are required by law to be included in the policy

the paid up addition uses the dividend

to purchase a smaller amount of the same type of insurance as the original policy

What is the benefit of choosing extended term as a nonforfeiture option

it has the highest amount of insurance protection

which of the following is true about a policy assignment

it transfers the rights of ownership from the owner to another person

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

an insured and his wife are both involved in a head on collision. The husband dies instantly and the wife dies 15 days later. the company pays the death benefit to the estate of the insured. this indicates that the life insurance policy had what provision?

common disaster

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

all of the following are TRUE statements regarding accumulation at interest option EXCEPT

the interest is not taxable since it remains inside the insurance policy- interest credited under this option is TAXABLE, whether or not the policy owner receives it

what type of insurance would be used for a Return of Premium rider

increasing term

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