4 exam

Which of the following provisions commence at the time of the delivery of the policy to the insured? A Misstatement of Age or Gender B Insuring Clause C Free Look Period D Suicide Clause

Free Look Period

In order to make sure that a creditor of the insured is not paid more than the outstanding loan at time of claim, the policyowner should: A Purchase a decreasing benefit policy that matches the loan repayment schedule B Indicate the percentage of the face amount the creditor will receive C Name the creditor as a primary beneficiary D Specify a dollar amount the creditor should receive at time of claim

Purchase a decreasing benefit policy that matches the loan repayment schedule' Credit insurance or decreasing term insurance is the best way to accomplish this.

The minimum free look period for individual life insurance and annuities (other than variable contracts) is how many days for persons under age 60? A 7 B 3 C 10 D 5

10 The minimum free look period for individual life insurance and annuities (other than variable contracts) is 10 days for persons under age 60.

For a replacement policy of individual life insurance and annuities (other than variable contracts), the free look period is at least how many days? A 20 B 10 C 15 D 7

20 For a replacement policy for individual life insurance and annuities (other than variable contracts), the free look period is at least 20 days.

Which of the following is an example of a collateral assignment? A A wealthy person signing over a life insurance policy to their irrevocable trust for estate planning purposes B A corporation signing over a policy on the life of an executive upon their retirement C A parent turning over the juvenile policy to the now adult child D A business using a life insurance policy to secure a bank loan

A business using a life insurance policy to secure a bank loan

What is the additional premium cost to have the automatic premium loan provision included in a permanent policy? A It varies by insurer and type of policy B Nothing C 10% of the base policy premium D 10% of the face amount

Nothing The Automatic Premium Loan provision is available on cash value policies only and does not require an additional premium.

When can a policyowner make a change in the policy's coverage or other benefits if an irrevocable beneficiary has been named? A At any time B After obtaining the insurer's consent C After the irrevocable beneficiary dies D After obtaining a court order

After the irrevocable beneficiary dies The policyowner may not change an irrevocable beneficiary unless the beneficiary dies or provides written consent for the change. If an irrevocable beneficiary is named, the owner may not make changes to the policy that affect the coverage or benefits without consent of the beneficiary.

For which of the following reasons may an insured return the policy for a full refund within the Free Look Period? A Death of the agent B Decline in financial rating of the insurance company C Increase in premium D Any reason

Any reason The insured/owner has the right to examine the policy for 10 days after delivery. If returned within that period, a full refund of premium is granted. It is the insurer's responsibility to prove the date of delivery.

Some traditional whole life policies offer a(n) __________ feature to keep the policy in force if there are sufficient cash values to do so. A Cash surrender B Automatic premium loan C Collateral D Bank loan

Automatic premium loan

Alice is the insured, Bill is the primary beneficiary, and Claire is the contingent beneficiary. Alice dies, so who receives the policy proceeds? A Bill B Claire C The treasury of the state where Alice lives D Alice's estate

Bill

The cash received by the policyowner when he/she terminates a policy is known as what? A Cash Surrender Value B Paid-Up Insurance Value C Accrued Premium Value D Loan Value

Cash Surrender Value

The _________ clause identifies the parties to the contract and the perils it covers. A Insuring B Consideration C Incontestability D Entire Contract

Insuring

Lucy uses her dividends to purchase single premium additional permanent benefits at her attained age. Which Dividend Option is Lucy exercising? A Paid-up Additions B Reduced Paid-Up C One-Year Term D Paid-up Option

Paid-up Additions Only Paid-up Additions, Paid-up Option and One-Year Term are dividend options. Reduced Paid-Up is a nonforfeiture option. Lucy wanted additional permanent benefits so she should choose Paid-up Additions.

Which of the following is the proper sequence of beneficiaries? A Primary, estate, tertiary B Estate, contingent, primary C Primary, tertiary, contingent D Primary, contingent, tertiary

Primary, contingent, tertiary

Which of the following policies allow for a partial withdrawal or partial surrender? A Universal Life B Traditional Whole Life C Current Assumption Life D Variable Whole Life

Universal Life A partial withdrawal of cash value is permitted in a Universal or a Variable Universal Life policy.

An insured forgets to pay his insurance premium. Instead of the policy lapsing, the premium is paid by the company. This would suggest that a __________ policy was purchased. A Whole Life B Decreasing term C Level term D Renewable term

Whole Life Only cash value policies can provide for missed premium payments to be paid with the policy's cash value through an automatic premium loan.

Frank purchases a life insurance policy and names his wife Jean as his beneficiary. They divorce several years later. If Frank dies before making any changes to his policy, can Jean still collect as his beneficiary? A No, she married someone else B It will have to go to probate court first C Yes, she is the beneficiary D Only if the insurer approves

Yes, she is the beneficiary

When a policy lapses due to nonpayment of premium, which nonforfeiture option is the automatic option? A Reduced paid-up B Extended term C Automatic premium loan D Cash surrender value

Extended term The automatic nonforfeiture option is extended term. Automatic premium loan is a policy provision which must be elected by the policyowner in advance of the policy lapsing.

B's policy had a $1,000 annual premium. B has not paid it for 2 years and wants to put the policy back in force. The insurer charges 10% interest on overdue premiums. What does B have to pay in order to reinstate their policy? A 2 years of premiums, plus interest due on overdue premiums amounts B 2 years of premiums C 2 years of premiums, a reinstatement fee, and interest D One month's premium, plus a reinstatement fee specified in the policy

2 years of premiums, plus interest due on overdue premiums amounts In order to reinstate the policy, the insured must provide evidence of insurability and the owner must pay all back premiums from the date of lapse plus interest. This means B needs to pay 2 years of unpaid premiums, plus the interest charged for overdue premiums. There is no additional reinstatement fee needed.

How long, typically, is the grace period on a $500,000 level term life insurance policy? A 90 days B 60 days C 1 year D 7 days

60 days In California, the grace period is 60 days from the premium due date.

Alice is the insured, Bill is the primary beneficiary, and Claire is the contingent beneficiary. Bill dies and Alice names Dale as the new primary beneficiary. Alice dies, so who receives the policy proceeds? A Claire B Bill's estate C Dale D Alice's estate

Dale Dale is the living primary beneficiary when Alice dies. Alice has the right to name, change, and re-name beneficiaries at any time.

The _________ period keeps a policy in force for a short time after the premium due date, allowing policyowners a little extra time to pay an overdue premium without a lapse in coverage. A Settlement B Reinstatement C Grace D Nonforfeiture

Grace The grace period is designed to prevent unintentional policy lapse by allowing overdue premiums to be paid, typically within one month of the premium due date, while the coverage remains in effect.

The ______________ clause is the insurance company's promise to pay the policy's death benefit to the named beneficiary, after receiving due proof of death of the insured, as long as the policy is in force. A Consideration B Entire Contract C Incontestability D Insuring

Insuring

Fred owns a 40-Pay Life Policy. He designated his wife, Ethel, as primary beneficiary. Upon Fred's death, Ethel receives a set amount for life. Fred chose which Settlement Option? A Fixed Period B Fixed Amount C Life Income D Extended Term

Life Income

If an insured dies during the policy's grace period, the insurer will: A Pay the death benefit, less the amount of premium due B Deny the claim C Pay the death benefit and waive the premium due D Pay the death benefit after the beneficiary has paid the premium due

Pay the death benefit, less the amount of premium due The policy is in force during the grace period and if death occurs during the grace period, the insurer pays the death benefit, minus any premiums or loans due.

The free look period provisions apply to which one of the following situations? A Policies issued in connection with a new purchase or a replacement purchase B Policies issued in connection with a credit transaction C Policies issued in connection with a conversion privilege D Policies issued in connection with a contractual policy change

Policies issued in connection with a new purchase or a replacement purchase The free look provision rules does not apply to policies issued in connection with a credit transaction, contractual policy change, or conversion privilege.

Which of the following statements is accurate concerning the changing of an irrevocable beneficiary? A The beneficiary may be changed only with the written consent of the present beneficiary B The beneficiary may be changed only on the anniversary date of the policy C The owner may change the irrevocable beneficiary at any time D The beneficiary can never be changed

The beneficiary may be changed only with the written consent of the present beneficiary Once an irrevocable beneficiary has been declared by the owner of the policy, the beneficiary designation can then be changed only with the irrevocable beneficiary's prior written consent. An irrevocable beneficiary has a vested interest in the policy benefits.

All of the following are situations in which the insurer is obligated to pay out a death benefit after the insured has died, except: A An insured commits suicide 7 years after the policy was issued B The premiums have not been paid and have been overdue for 3 years C The insurer discovers the gender of the insured was misstated D The insured was an experienced pilot who died in a plane crash but had a policy issued with an aviation rider for an additional premium

The premiums have not been paid and have been overdue for 3 years The insuring clause states that the policy must be in force. A policy that has overdue premiums unpaid will cause the policy to lapse which means no coverage was in effect.

If the premiums are not paid on a Traditional Whole Life policy that has been in force for decades with no loan outstanding, what happens? A Unless specified otherwise, the cash values buy extended term B The insurer mails a check to the policyowner in the amount of the policy's cash value C The policy lapses and is of no value to the policyowner D The policy becomes a reduced paid-up policy

Unless specified otherwise, the cash values buy extended term

Most often, life policies pay death claims in a single lump sum. The options that allow benefits to be paid other than lump sum are called _____________. A Mandatory Options B Settlement Options C Statutory Options D Distribution Options

Settlement Options