quiz 8

Each of the following is true regarding policy loans except: a.All life policies contain a policy loan provision. b.Insured can borrow up to the amount of cash available in the contract. c.The money borrowed does not have to be paid back. d.Some companies charge an interest rate on the money borrowed.

a.All life policies contain a policy loan provision.

Transferring all or a portion of a policyowner`s interest to an insurance policy is known as: a.Assignment of interest b.Assignee`s interest c.A beneficiary`s interest d.An Insurable interest

a.Assignment of interest

Which of the following could not be named as a beneficiary? a.Insured b.Spouse c.Child d.Complete stranger

a.Insured

Which of the following premium modes is the least expensive? a.Pay in full. b.Automatic drafting plan, such as BCP. c.Annually. d.Monthly billed direct.

a.Pay in full.

If an insurer fails to pay the death claim within 30 days, then it must: a.Pay interest from the insured`s date of death. b.Pay interest from the insured`s date of death and a 10% penalty. c.Pay interest at the legal rate starting on the 31st day. d.Insurers have 30 days to contest the policy and 30 days to pay the claim.

a.Pay interest from the insured`s date of death.

Which creditors would have the right to claim a portion of a death benefit? a.Creditors of the insured`s estate. b.Creditors of the beneficiary. c.Creditors of the insured. d.Creditors of the insurer.

b.Creditors of the beneficiary.

All of the following are true about the grace period except: a.The policy will continue in force during the grace period. b.Proceeds will be reduced to zero if the insured dies during the grace period. c.This amount of time is usually 30 to 60 days. d.This period protects the policyholder from unintentional lapses.

b.Proceeds will be reduced to zero if the insured dies during the grace period.

An insurance producer is prohibited from the following except: a.Producer may get a personal loan from a client. b.Producer may be named as the owner or beneficiary in a life policy for a client who is a relative. c.Producer may influence the client one way or another. d.Producer may be named beneficiary in a client`s will.

b.Producer may be named as the owner or beneficiary in a life policy for a client who is a relative.

All of the following are common provisions of life insurance policies except the: a.Right to examine clause b.Spendthrift clause c.Future children clause d.Change of beneficiary clause

b.Spendthrift clause

The promise that the insured has a specified amount of life coverage while the insurer is completing the underwriting is known as: a.IIR - Interim Insurance Receipts b.TIA - Temporary Insurance Agreement c.SIA - Specific Insurance Agreement d.PIA - Partial Insurance Agreement

b.TIA - Temporary Insurance Agreement

The main benefit for reinstating a lapsed policy rather thanpurchasing a new policy is: a.The misstatement of age clause may not begin again. b.The premium remains at the same level, based on the insured`s original age. c.The premium is guaranteed less than any new product that comes out. d.The premium remains at the same level, based on the insured`s current age.

b.The premium remains at the same level, based on the insured`s original age.

If the insured and beneficiary die in a car accident and the accident report determines the insured died first, which of the following is true? a.The contingent beneficiary receives the death proceeds. b.The primary beneficiary estate receives the proceeds. c.The insurance company keeps the money because this is too confusing. d.The estate of the insured receives the death proceeds.

b.The primary beneficiary estate receives the proceeds.

What happens under the automatic premium loan option? a.This allows an amount greater than the cash value to be accessed under certain conditions. b.This prevents the unintentional lapse of a policy due to nonpayment of the premium. c.This allows a specific loan amount from the cash value at specific times designated by the insured. d.This prevents the death benefits from being paid to an estate instead of a beneficiary.

b.This prevents the unintentional lapse of a policy due to nonpayment of the premium.

All of the following are rights of policy ownership except: a.Designating beneficiaries b.Selecting a nonforfeiture option c.Changing a policy provision with agents approval d.Selecting a settlement option

c.Changing a policy provision with agents approval

Suppose that you name someone as your irrevocable beneficiary. Without the permission of the irrevocable beneficiary, you give up the right to do all of the following except: a.Change beneficiaries b.Borrow against the policy c.Continue to pay premiums d.Surrender the policy and take the cash value

c.Continue to pay premiums

If a beneficiary wants the death proceeds to be paid monthlyfor the next 20 years, this is called: a.Fixed Amount Installments b.Cash Payment for 20 c.Fixed Period Installments d.Period Certain Guaranteed

c.Fixed Period Installments

All statements made by the insured will be considered representations and not warranties except: a.In the case of misstatement of age. b.In the case of misstatement of beneficiary names. c.In the case of fraud. d.In the case of non payment of premium.

c.In the case of fraud.

The common provision that says the insurer will not contest the policy after 2 years of being in force is: a.Delay Clause b.Insuring clause c.Incontestability clause d.Suicide clause

c.Incontestability clause

If an insured commits suicide after the suicide clause in the insured's life insurance policy has expired, the insurance company will: a.Refund only the premiums paid b.Refund the premiums paid plus interest c.Pay the death benefit d.Refuse to pay the death benefit or refund any premiums

c.Pay the death benefit

If the insured dies on Monday and the primary beneficiary dies on Tuesday, who receives the proceeds? a.Tertiary beneficiary b.Contingent beneficiary c.Primary beneficiary`s estate. d.The insured`s estate.

c.Primary beneficiary`s estate.

Jason has a $500K life policy that is a per stirpes. What happens when Jason dies after one of his 3 children? a.The 2 remaining children receive $250K each. b.The oldest child gets all $500K. c.The 2 remaining children receive their third and the heirs of the child who died would split the final third equally. d.The 2 remaining children get $100K each and the children of the child who died would receive $50K.

c.The 2 remaining children receive their third and the heirs of the child who died would split the final third equally.

All of the following statements pertaining to reinstatement of a life insurance policy are correct except: a.When reinstating a policy, the company must charge the policyowner for interest on past due premiums b.When reinstating a policy, evidence of insurability is usually required by the insured. c.The insurer cannot require that previous loans be repaid. d.When reinstating a policy, the company must charge the policyowner for past due premiums

c.The insurer cannot require that previous loans be repaid.

If Mr. X selects the reduced paid up nonforfeiture option, his coverage will continue a.Until death or age 100, whichever occurs first, in the amount of $100,000 b.For the length of time stated in the policy's table of guaranteed values in the amount of $100,000 c.Until death or age 100, whichever occurs first, in an amount stated in the policy's Table of Guaranteed values within his policy. d.For the length of time and in the amount stated in the policy's table of guaranteed values

c.Until death or age 100, whichever occurs first, in an amount stated in the policy's Table of Guaranteed values within his policy.

A viatical settlement is an: a.agreement that allows an insurer to refund all premiums due to misrepresentation. b.agreement that changes the beneficiary to an irrevocable beneficiary in a divorce settlement. c.agreement that provides a life insurance policyowner immediate cash in exchange for death benefit. d.agreement that pays the insured a lump sum cash value to surrender their life policy.

c.agreement that provides a life insurance policyowner immediate cash in exchange for death benefit.

Which one of the following is not a settlement option? a.Lump Sum b.Period Certain c.Joint and Survivor d.Fixed Interest Only

d.Fixed Interest Only

All of the following incontestability clause statements are true except: a.Misstatements that are fraudulent may not be used to deny a claim after the first two years of being in force. b.After two years of being in force, an insurer cannot deny a claim for death by suicide. c.Preexisting conditions that are not known will be covered in the first two years. d.No statement made in the application may be used to deny a claim if in force for one year.

d.No statement made in the application may be used to deny a claim if in force for one year.

Who has the right to take legal action if the insurer does not pay the death benefit as stated in the policy? a.The insured. b.The insured`s estate. c.Both primary and contingent beneficiaries. d.The beneficiary.

d.The beneficiary.

With regard to beneficiaries, what does per capita mean? a.The death benefit will skip the primary and go directly to the contingent. b. the death benefit will be split equally by bloodline. c. The death benefit will be split equally between the contingent and the tertiary. d.The death benefit will be split equally between each living child.

d.The death benefit will be split equally between each living child.

Dividends are normally paid to which of the following? a.The stockholders of a mutual company b.The officers of a mutual company c.The policyowners of a stock company d.The policyowners of a mutual company

d.The policyowners of a mutual company

Under the provisions of the uniform simultaneous death act, how would the proceeds of an insurance policy settle if the insured and the only primary beneficiary were killed in the same accident, with no evidence as to which died first? a.The proceeds would be distributed as though the beneficiary survived the insured b.The court would have to determine how to pay out the proceeds to the insureds heirs. c.The proceeds would be shared equally by the insureds estate and the beneficiarys estate d.The proceeds would be distributed as through the insured survived the beneficiary

d.The proceeds would be distributed as through the insured survived the beneficiary