VOCAB 3

The sole beneficiary of a life insurance policy dies before the insured. If the policyowner fails to change the beneficiary before the insured's death, the proceeds of the policy will go to

The insured's estate

The sole beneficiary of a life insurance policy dies before the insured. If the policyowner fails to change the beneficiary before the insureds death, the proceeds of the policy will go to

The insured's estate

Free look

The policyowner is permitted a certain number of days once the policy is delivered to look over the policy and return it for a refund of all premiums paid

All of the following are true regarding the guaranteed insurability rider EXECPT

The rider is available to all insurers with no additional premium

Common disaster clause

When insured and primary die at the same time, it is assumed that the primary died first

If a settlement option is not chosen by the policyowner or the beneficiary, which option will be used?

lump sum

Irrevocable Beneficiary

one that cannot be changed without the beneficiary's consent

Primary Beneficiary

the first entitled to receive the policy proceeds on the insured's death

Revocable Beneficiary

the policyholder reserves the right to change the beneficiary designation without the beneficiary's consent

Accidental Death and Dismemberment

An insurance policy provision that protects the insured if he or she suffers loss of sight or loss of limb(s) or death by accident

What is the clause that describes the method of paying the death benefit in the event that the insured and beneficiary are both killed in the same accident?

Common disaster clause

What happens when a policy is surrendered for its cash value?

Coverage ends and the policy cannot be reinstated

Which of the follwing is NOT typically excluded from life policies?

Death due to plane crash for a fare-paying passenger

Which nonforfeiture option has the highest amount of insurance protection?

Extended term

If a life policy allows the policyowner to make periodic additions to the face amount at standard rates, without proving insurability, the policy includes a

Guaranteed insurability rider

Two attorneys operate their practice as a partnership. They want to start a program through their practice that will provide retirement benefits for themselves and three employees. They would likely choose

HR-10 (Keogh Plan)

Which of the following policy components contains the company's promise to pay?

Insuring clause

What is the purpose of a free look period in insurance policies?

It allows the insured to reject the policy with a full refund.

Which of the following is true about the mandatory free look in a life insurance policy?

It commences when the policy is delivered

What would be an advantage to naming a contingent (or secondary) beneficiary in a life insurance policy?

It determines who receives policy benefits if the primary beneficiary is deceased

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 the premium on the children's rider in a life insurance policy?

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

Cash (Lump-Sum) Payment

Upon the death of the insured, or at the point of endowment, the contract is designed to pay the proceeds in cash, called a lump sum, unless the recipient chooses a different mode of settlement

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

$200,000

For how long is an insurance company allowed to defer policy loan requests?

6 months

Accidental death

A death that is caused by unexpected or unintended means

Insuring Clause

Contains the company's promise to pay

The insured under a $100,000 life insurance policy with a triple indemnity rider for accidental death was killed in a car accident. It was determined that the accident was his fault. The triple indemnity rider in the policy specifies that the death must not be contributed to by the insured in any manner. In this case, what will the policy beneficiary receive?

$100,000

A rider attached to a life insurance policy that provides coverage on the insured's family members is called the

Other-insured rider

An insured has a life insurance policy from a participating company and receives quarterly dividends. He has instructed the company to apply the policy dividends to increase the death benefit. The divided option that the insured has chosen is called

Paid up additions

Which of the following allows the insurer to relieve a minor insured from premium payments if the minors parents have died or become disabled?

Payor benefit

Which is NOT true about beneficiary designations?

The beneficiary must have insurable interest in the insured

Which of the following statements is TRUE concerning irrevocable beneficiaries?

They can be changed only with the written consent of that beneficiary

The paid-up addition option uses the dividend

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

Contingent Beneficiary

entitled to the proceeds if the primary beneficiary dies before the insured