CH 3

The insured under a $100000 life insurance policy with a triple indemnity rider for an 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 benefit receive ?

100,000

Which of the following is true about class designation

Beneficiaries are not identified by name

An insured and his wife are both involved in a head-on collision. The husband dies instantly, and the wife dies 15 days later. The company pays the death benefit to the estate of the insured. This indicates that the life insurance policy had what provision?

Common Disaster

All of the following are dividend options EXCEPT

Fixed period installments

The life insurance policy clause that prevents an insurance company from denying of a death claim after a specified period of time is known as the

Incontestability clause

What type of in surname would be used for a return of premium rider

Increasing term

When a life insurance policy was issued, the policyowner designated a primary and a contingent beneficiary. Several years later, both the insured and the primary beneficiary died in the same car accident, and it was impossible to determine who died first. Which of the following would receive the death benefit?

Insured's contingent beneficiary

All of the following are Nonforfeiture options EXCEPT

Interest only

The policyowner wants to make sure that upon his death, the life policy will pay a portion of the proceeds annually to his spouse, but that the principal will be paid to their children when they reach a certain age. Which settlement option should the policyowner choose?

Interest only option

Using a class designation for beneficiaries means

Naming beneficiaries as a group

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

Other-insured rider

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

Paid up addition

Which of the following riders would NOT cause the Death Benefit to increase?

Pay or benefit

Which of the following riders would not cause the death benefit to increase ?

Pay or benefit rider

Which nonforfeiture option provides coverage for the longest period of time?

Reduced Paid-Up

An insured died by suicide one year after the life insurance policy was issued. The insurer will

Refund the premiums paid

Which of the following determines the length of time that beneficiaries will be received under the Fixed amount settlement option

Size of each installment

Which is not true about beneficiary designation ?

The beneficiary must have insurable interest in the insured

The sole beneficiary of a life insurance policy dies before the insured. If the policyowner does not amend the beneficiary designation, what will happen to the policy's death benefit?

The insureds estate

All of the following are true statements regarding the accumulation at interest option EXCEPT

The interest is not taxable since it remains inside the insurance policy.

Which is true about a spouse term rider ?

The rider is usually level term insurance

An insured has chosen joint and 2/3 survivor as the settlement option. What does this mean to the beneficiaries?

The surviving beneficiary will continue receiving 2/3 of the benefit paid when both beneficiaries were alive.

What is the purpose of a suicide provision within a life insurance policy?

To protect the insurer from persons who purchase life insurance with the intention of committing suicide

An insured pays an annual premium to his insurer. In return, the insurer promises to pay benefits in accordance with the terms of the contract. This is called

consideration

Which of the following riders added to a life insurance policy can pay part of the death benefit to the insured to cover expenses incurred in a nursing or convalescent home?

long term care

Which option is being utilized when the insurer accumulates dividends at interest and then uses the accumulated dividends, plus interest and the policy cash value to pay the policy up early

paid up option

A father owns a life insurance policy on his 15-year-old daughter. The policy contains the optional Payor Benefit rider. If the father becomes disabled, what will happen to the life insurance premiums?

the insured's premiums will be waived until she is 21.

The two types of assignments are

Absolute and collateral

Under an extended term nonforfeiture option, the policy cash value is converted to

The same face amount as in the whole life policy

What is the purpose of a suicide provision with in a life insurance policy

To protect the insurer from persons who purchase life insurance with the intention of committing suicide

What is the purpose of a fixed-period settlement option?

To provide a guaranteed income for a certain amount of time

When a policyowner designates a group of individuals as the beneficiary of a life insurance death benefit without specifically naming the individuals, this is called

Class designation

The provision which states that both the policy and a copy of the application form the contract between the policyowner and the insurer is called the

Entire Contract

An individual is purchasing a permanent life insurance policy with a face value of $25,000. While this is all the insurance that he can afford at this time, he wants to be sure that additional coverage will be available in the future. Which of the following options should be included in the policy?

Guaranteed insurability option

Which of the following riders is often used in business life insurance policies when the policy owner needs to change the insured under the policy ?

Substitute insured rider

The interest earned on policy dividend is

Taxable

The interest earned pm policy dividends is

Taxable

Which is TRUE about the cash surrender nonforfeiture option?

Funds exceeding the premium paid are taxable as ordinary income.

Which is true about the cash surrender non forfeiture option

Funds exceeding the premium paid are taxable as ordinary income.

Which provision of a life insurance policy states the insurer duty to pay benefits upon the death of the insured, and to whom the benefits will be paid out

Insuring clause

Which of the following statements is TRUE about a policy assignment

It transfers right of ownership from the owner to another person

What is the other term for the cash payment settlement option ?

Lump sum

What is the term for how frequently a policy owner is required to pay the policy premium

Mode

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

Pay benefit

Children's riders attached to whole life policies are usually issued as what type of insurance

Term

Non forfeiture values guarantee which of the following for the policyowner?

That the cash value will not be lost

Which of the following information will be stated in the consideration clause of a life insurance policy

The amount of premium payment

Which of the following information will be stated in the consideration clause of a life insurance policy ?

The amount of premium payment

The primary beneficiary of her husband life policy found that no settlement option was stated in the policy on the date of her husband's death. Who will select the settlement option in this case

The beneficiary chat

If an insured withdraws a portion of the face amount in the form of accelerated benefits because of a terminal illness, how will that affect the payable death benefit from the policy?

The death benefit will be smaller

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

This rider is available to all insureds with no additional premium

The rider in a whole life policy that allows the company to forgo collecting the premium if the insured is disabled is called

Waiver of Premium

When a reduced-paid up nonforfeiture option is chosen, what happens to the face amount of the policy?

It is reduced to the amount of what the cash value would buy as a single premium

An insured has had a life insurance policy that he purchased 3 years ago when he was 40 years old. He is killed in an automobile accident and it is discovered that he is actually 45 years old, and not 43, as stated on the application. What will the company do?

Pay a reduced death benefit

If an insured continually uses the automatic premium loan option to pay the policy premium,

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

A business owner was trying to obtain a bank loan to fund the purchase of a new business facility, but the bank required proof of additional assets to secure the loan. The business owner then decided to use her $250,000 life insurance policy to secure the loan. Which provision makes this possible?

collateral assignment

The dividend option in which the policy owner uses dividends to purchase a term policy for one year is referred to as the

one year term option the dividend is utilized to purchase one year term insurance

Which of the following statements about the reinstatement provision is true ?

It requires the policy owner to pay all overdue premiums with interest before the policy is reinstated

Which two terms are associated directly with the premium?

Level or flexible

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?

Term rider