Unit 6 Segment

6. Ron, the insured under a $100,000 life insurance policy, dies during the grace period. What happens, considering that the premium on the policy has not been paid?

The amount of the premium is deducted from the policy proceeds paid to the beneficiary.

3. Leland elects to surrender his whole life policy for a reduced paid-up policy. The cash value of his new policy will

continue to increase

The rider that provides for a waiver of premiums on a juvenile policy if the adult payor dies or becomes disabled is

a payor rider

Which of the following is (are) a common life insurance policy exclusion?

Death from war

13. The most common guaranteed insurability riders allow additional life insurance to be purchased on the insured within a range of ages. The common age range in which guaranteed insurability is available is from

age 25 to age 40

1. Which of the following statements about a life insurance policy's cash value is CORRECT?

b) When a whole life insurance policy is active, the owner can borrow from the cash value.

3. All of the following are standard life insurance policy nonforfeiture options EXCEPT (a) cash surrender option (c) extended term insurance option (d) reduced paid-up (permanent) insurance option

b) one-year term insurance option

1. Which of the following is stated in the consideration clause of a life insurance policy?

c) Amount and frequency of premium payments

If an error is discovered while an insured is living and the insured is older than the policy states, the insurance company can

increase the premium

"If an insurance company determines that the insured is totally disabled, the policyowner is relieved of paying the policy premiums as long as the disability continues." This statement describes the

waiver of premium rider

4. Which of the following is stated in the consideration clause of a life insurance policy?

(c) Amount and frequency of premium payments

Which of the following allows 30 days during which premiums may be paid to keep policies in force?

(a) Grace period

2. If an error is discovered after an insured dies and the insured was younger than the insurance policy stated, the insurance company will

(d) increase the death benefits

9. Which of the following statements regarding a cost of living (COL) rider on a life insurance policy is CORRECT?

An inflation index, usually the Consumer Price Index, determines the amount of inflation adjustment that is made to the policy up to a maximum percentage increase.

1. All of the following statements pertaining to reinstatement of a life insurance policy are correct EXCEPT (b) when reinstating a policy, the insurer will charge the policyowner for past-due premiums (c) when reinstating a policy, the insurer will charge the policyowner for interest on past-due premiums (d) a new contestable period becomes effective in a reinstated policy

(a) a suicide exclusion period is renewed with a reinstated policy

1. All of the following statements regarding assignment of a life insurance policy are correct EXCEPT -to secure a loan, the policy can be transferred temporarily to the lender as security for the loan - the life insurance company assumes no responsibility for the validity of an assignment -the life insurance company must be notified in writing by the policyowner of any assignment

(b) the policyowner must obtain approval from the insurance company before a policy can be assigned

5. Which provision of a life insurance policy states that the application is part of the contract?

(c) Entire contract clause

5. An error in age is discovered after the death of an insured but before any policy death proceeds are distributed. The insured was older than previously assumed. How would an insurance company handle such a situation?

(c) The amount of death proceeds would be reduced to reflect whatever benefit the premium paid would have purchased at the correct age.

9. Which of the following statements regarding the assignment of a life insurance policy is NOT correct? (a) Absolute assignment involves a complete transfer, giving the assignee full control over the policy. (b) Under a collateral assignment, a creditor is entitled to be reimbursed out of the policy's proceeds only for the amount of the outstanding credit balance. (c) Under a collateral assignment, policy proceeds in excess of the collateral amount pass to the insured's beneficiary.

(d) All beneficiaries must expressly approve any assignments of life insurance policies.

8. In which of the following situations does the incontestable clause apply?

(d) Concealment of smoking

2. Which life insurance provision allows the policyholder to inspect and, if dissatisfied, to return the policy for a full refund?

(d) Free look

4. To what period would a 14-day free-look provision apply in Florida?

(d) The first 14 days after the issued policy has been received by the insured

7. Each of the following statements about the incontestable clause in a life insurance policy is correct EXCEPT (a) the clause gives people assurance that when their policies become claims, they will be paid without delays or protests (b) the incontestable clause means that after a certain period, an insurer cannot refuse to pay the proceeds of a policy or void the contract (c) incontestable clauses usually become effective two years from the issue date of the policy

(d) insurers can void a contract even after the specified period, provided they can prove the policy was purchased fraudulently

4. John stopped paying premiums on his permanent life insurance policy 8 years ago though he never surrendered it. He is still insurable and has no outstanding loan against the policy. The company probably will decline to reinstate the policy because the time limit for reinstatement has expired. The limit usually is

(d) three years or as long as seven years

12. Which of the following is stated in the consideration clause of a life insurance policy?

Amount and frequency of premium payments