Life Policy Riders, Provisions, Options and Exclusions

Which of the following, when attached to a permanent life insurance policy, allows the policyowner to customize the policy to provide an additional amount of temporary insurance on the insured, or allows amounts of temporary insurance to cover other family members? A Term rider B Accidental death and dismemberment rider C Guaranteed insurability Rider D Change of insured rider

A Term Rider

Which of the following is true about the premium on the children's rider in a life insurance policy? A It decreases when an adopted child is added to the policy. B It remains the same no matter how many children are added to the policy. C It decreases when the oldest child reaches the age of 21. D It increases when a newborn baby is added to the policy.

B It remains the same no matter how many children are added to the policy.

Which of the following components must a life insurance policy have to allow policy loans? A Dividends B Flexible premiums C Face Amount D Cash Value

D Cash Value The policy loan option is found only in policies that contain cash values

What is the other term for the cash payment settlement option? A Principal amount B Face amount C Proceeds D Lump Sum

D Lump Sum

If an insured continually uses the automatic premium loan option to pay the policy premium, A The insurer will increase the premium amount. B The policy will terminate when the cash value is reduced to nothing. C The face amount of the policy will be reduced by the automatic premium loan amount. D The cash value will continue to increase

B The policy will terminate when the cash value is reduced to nothing.

Which of the following explains the policyowner's right to change beneficiaries, choose options, and receive proceeds of a policy? A The Entire Contract Provision B The Consideration Clause c.) Assignment Rights D Owner's Rights

Owner's Rights

An insured owns a $50,000 whole life policy. At age 47, the insured decides to cancel his policy and exercise the extended term option for the policy's cash value, which is currently $20,000. What would be the face amount of the new term policy? A $20,000 B $25,000 C $50,000 D The face amount will be determined by the insurer

C $50,000

When a reduced-paid up nonforfeiture option is chosen, what happens to the face amount of the policy? A It is increased when extra premiums are paid. B It decreases over the term of the policy. C It remains the same as the original policy, regardless of any differences in value D It is reduced to the amount of what the cash value would buy as a single premium.

D It is reduced to the amount of what the cash value would buy as a single premium. In a reduced paid-up policy, the original policy's cash value is used as single premium to pay for a permanent policy with a reduced face amount from the original, hence the name. The new policy accumulates in cash value until its maturity or the insured's death.

Which is TRUE about the cash surrender nonforfeiture option? A After the cash surrender, the insured is covered for a grace period of 1 month. B The policy remains active for some time after the policyholder opts for cash surrender. C The policyholder receives the original cash value of the policy. D Funds exceeding the premium paid are taxable as ordinary income

D Funds exceeding the premium paid are taxable as ordinary income

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? A Joint and survivor B Single life C Fixed-amount D Life income with period certain

D Life income with period certain The life income with period certain option guarantees payments for the life of the recipient and also specifies a guaranteed period of continued payments. If the recipient should die during this period, the payments would continue to a designated beneficiary for the remainder of the period.

Which nonforfeiture option has the highest amount of insurance protection? A Extended Term B Conversion C Decreasing Term D Reduced Paid-Up

A Extended Term