CH.7 Quiz Review

An Insured wishes to name her daughter as beneficiary for her Life Insurance policy, but does not want to give up any ownership rights. The Insured should name her daughter as? Select one: a.An irrevocable beneficiary. b.A revocable beneficiary. c.A universal beneficiary. d.A preferred beneficiary

A revocable beneficiary.

Which of the following statements regarding AD&D Insurance is CORRECT? Select one: a.AD&D policies cover accidents only, NOT sickness. b.AD&D policies do not provide death benefits, just dismemberment benefits. c.AD&D policies are required to be added to all Life policies. d.AD&D policies are reimbursement contracts.

AD&D policies cover accidents only, NOT sickness.

A Multiple Indemnity Rider (also referred to on the exam as an Accidental Death Benefit Rider) is best suited for coverage of which of the following? Select one: a.Hospital Costs b.Lost Income c.Accidental Death or Dismemberment d.Accidental Death

Accidental Death

New point - be sure to read the explanation! The purpose of having the Insured name a beneficiary in a life insurance policy is to: Select one: a.Give the Producer a larger commission. b.Avoid probate.

Avoid probate. (By naming a beneficiary, the money goes directly to the beneficiary and doesn't touch the Insured's estate, thus avoiding probate. Probate refers to settling the deceased insured's estate and paying all appropriate death taxes.)

Under which of the following circumstances would an AD&D policy pay a benefit? Select one: a.When the Insured loses the use of his legs. b.When the Insured is a soldier and has to have an arm amputated. c.When the Insured is blinded in a tragic grilling accident. d.When an Insured dies as the result of a stroke.

When the Insured is blinded in a tragic grilling accident.

Teka has two primary beneficiaries, X and Y. X dies and then Teka dies. Who gets the death benefit? Select one: a. half goes to the estate of X and the other half to Y. b. all goes to Y.

it all goes to Y.

Carla owns a $100,000 Life policy with a $50,000 AD&D Rider. She is hit by a train while jogging and her foot is severed. While she is in the hospital, she contracts an infection and dies five weeks later. The Insurer will pay: Select one: a.$50,000 b.$100,000 c.$125,000 d.$150,000

$125,000 (In addition, the Insurer will pay the capital sum (half the AD&D rider's face value) for the loss of one foot. However, there will be no payment under the AD&D rider for the death caused by infection - the AD&D rider will only pay a death benefit for an accidental death.)

Chad owns a $100,000 Life policy with a Double Indemnity Rider. He accidently runs into a boat and is killed instantly. How much will the Insurer pay? Select one: a.$0 b.$100,000 c.$200,000 d.$300,000

$200,000

Jim owns a $250,000 Life policy with a $50,000 AD&D Rider. While mountain climbing, Jim had an asthma attack which causes him to lose control. He fell and died. What is the total death benefit? Select one: a.No death benefit will be paid because the death occurred while engaging in a dangerous hobby. b.$250,000 c.$275,000 d.$300,000

$250,000

Under the Common Disaster Provision, both the Insured and the Beneficiary are presumed to have died at the same time if the Beneficiary dies within what time after the Insured's death? Select one: a.30 days b.60 days c.90 days d.120 days

60 days

In order to qualify for AD&D coverage, the accident must directly cause death within how many days? Select one: a.30 Days b.60 Days c.90 Days d.120 Days

90 Days

Under AD&D Insurance, what does the capital sum represent? Select one: a.The cost of renewing the policy if no claims have been filed. b.A lump sum, half of the face value, paid for accidental dismemberment of a primary body part. c.A periodic income payment paid for accidental dismemberment of a primary body part that results in partial disability. d.A periodic income payment paid to the beneficiary after the Insured's accidental death.

A lump sum, half of the face value, paid for accidental dismemberment of a primary body part.

The Simultaneous Death Act applies to the simultaneous death of the Insured and the: Select one: a.Beneficiary b.Insurer c.Producer d.Owner

Beneficiary

New point - be sure to read the explanation! If Kori's life insurance policy specifies that her beneficiaries are "her children," this is an example of what type of beneficiary designation? Select one: a.Contingent b.Irrevocable c.Class d.Individual

Class

An AD&D Rider will cover which of the following? Select one: a.Suicide. b.Death in combat (for military only). c.Death while on a regularly scheduled flight. d.Death by a sudden major heart attack.

Death while on a regularly scheduled flight.

Which of the following would NOT be covered by an AD&D policy? Select one: a.Hands b.Eyes c.Income d.Death

Income

What does a Multiple Indemnity Rider do? Select one: a.Increases the death benefit by a specified multiple if the death occurs as the direct result of an accident. b.Allows the policy owner to name more than one beneficiary. c.Provides coverage for any individual injured by the Insured where the Insured is found liable. d.Allows the policy owner to cover additional (multiple) Insureds under the same policy.

Increases the death benefit by a specified multiple if the death occurs as the direct result of an accident.

Which of the following beneficiary choices restricts the policy owner's flexibility? Select one: a.Irrevocable b.Revocable

Irrevocable

Jack and Nancy are going through a divorce. As part of the settlement, Jack is required to name Nancy as the beneficiary of his Life policy. What type of beneficiary designation is this likely to be? Select one: a.Irrevocable beneficiary. b.Revocable beneficiary. c.Secondary beneficiary. d.Primary beneficiary.

Irrevocable beneficiary

Which of the following statements regarding an AD&D policy is CORRECT? Select one: a.It provides a death benefit, so the Insured should name a beneficiary. b.It will pay the capital sum (rather than the principal sum) in the event of an accidental death. c.Dismemberment benefits are paid in monthly payments. d.It pays a death benefit when death is the result of disease, such as bubonic plague.

It provides a death benefit, so the Insured should name a beneficiary.

An AD&D policy covers each of these accidents EXCEPT? Select one: a.Loss of hearing b.Death c.Dismemberment d.Loss of vision

Loss of hearing

Jack named his wife Nancy as the beneficiary under his life policy with their daughter Cassie as the contingent beneficiary. Jack's policy contained a Common Disaster Provision. Jack and Nancy were both in an accident. Jack died immediately and Nancy died 95 days later as a result of injuries suffered in the accident. The Insurer will pay the benefits under Jack's policy to which of the following? Select one: a.Nancy and Cassie will each receive 50% of the benefits. b.Cassie c.Nancy d.Jack's estate

Nancy (Because Nancy lived longer than the 60 days required by the Common Disaster Provision, she will receive the death benefit under Jack's policy.)

Zena is diagnosed with cancer. As a result, her foot must be amputated. Several weeks later, Zena died from the cancer. How much will her AD&D policy pay? Select one: a.Only the principal sum. b.Only the capital sum. c.Neither the capital sum nor the principal sum. d.Both the capital sum and the principal sum.

Neither the capital sum nor the principal sum.

Jack has named Nancy as the beneficiary on his Life policy and daughter Cassie as the contingent beneficiary. Under the Common Disaster Clause, what will happen if Jack and Nancy are killed at the same time? Select one: a.The policy proceeds will be paid to Cassie. b.The policy proceeds will be paid to Nancy's estate. c.The policy proceeds will be paid to Jack's estate. d.The policy proceeds will be distributed among Nancy and Jack's surviving children.

The policy proceeds will be paid to Cassie.

Helen has a Group Health policy and an AD&D policy. She falls down and is injured while at a dinner with a business client. Which policy will pay? Select one: a. The Group Health policy will cover the medical expenses. b. Helen will sue somebody and make them pay. c. Neither, Workers Compensation Insurance will cover Helen's loss. d. The AD&D policy will pay the capital sum.

Neither, Workers Compensation Insurance will cover Helen's loss. (This is a tricky question. Because this happened during a work-related event, Workers Compensation will provide coverage. AD&D won't pay because there was no death and no dismemberment.)

Carl owns a $250,000 Life policy with a Triple Indemnity Rider. While running a marathon he suffers a fatal heart attack. How much will the Insurer pay?

Select one: a.$0 b.$250,000 c.$500,000 d.$750,000

Under an AD&D policy, which pays the most, the Capital Sum or the Principal Sum? Select one: a.The Principal Sum b.It varies with the policy. c.The Capital Sum d.They both pay the same.

The Principal Sum

Jack and Nancy are both killed in a car accident. Jack has a Life policy that names Nancy as the primary beneficiary and their daughter, Cassie as the contingent beneficiary. Under the Common Disaster Clause, who will receive the death benefit if Nancy lived 5 minutes longer than Jack? Select one: a.The primary beneficiary's estate. b.The daughter (Cassie). c.The Insured's estate. d.One half to the Insured's estate and one half to the daughter (Cassie).

The daughter (Cassie)

Li owns a policy and wants to change the beneficiary. Which of the following statements is true regarding changing the beneficiary? Select one: a.The insurance company will notify the previous beneficiary and then make the change. b.The insurance company will consider the change effective immediately if the request is in writing. c.The insurance company will need to obtain the previous beneficiary's consent before the change can be completed. d.The beneficiary cannot be changed without a court order.

The insurance company will consider the change effective immediately if the request is in writing.

Nancy is the beneficiary on Jack's Life policy and Cassie is the contingent beneficiary. What will happen if Nancy and Jack are killed at the same time under the Uniform Simultaneous Death Act? Select one: a.The policy proceeds will be paid to Jack's estate. b.The policy proceeds will be distributed among all of Nancy and Jack's surviving children. c.The policy proceeds will be paid to Cassie. d.The policy proceeds will be paid to Nancy's estate.

The policy proceeds will be paid to Cassie.

Nancy is the beneficiary on Jack's Life policy and their daughter Cassie is the contingent beneficiary. Nancy and Jack are involved in a serious car accident, which kills Jack instantly. Nancy is on life support for two weeks and then dies. What will happen under the Common Disaster Clause? Select one: a.The policy proceeds will be paid to Nancy's estate. b.The policy proceeds will be paid to Cassie. c.The policy proceeds will be paid to Jack's estate. d.The policy proceeds will be distributed among Nancy and Jack's surviving children.

The policy proceeds will be paid to Cassie.

Nancy is the beneficiary on Jack's Life policy and their daughter Cassie is the contingent beneficiary. Nancy and Jack are involved in a serious car accident, which kills Nancy instantly. Jack is on life support for two weeks and then dies. Who gets the policy proceeds? Select one: a.The policy proceeds will be paid to Nancy's estate. b.The policy proceeds will be distributed among Nancy and Jack's surviving children. c.The policy proceeds will be paid to Jack's estate. d.The policy proceeds will be paid to Cassie.

The policy proceeds will be paid to Cassie.

Jack named Nancy as his Life policy beneficiary. Nancy dies but Jack forgot to name another beneficiary. Several years later, Jack died but Nancy was still named as beneficiary. What will happen? Select one: a.The policy proceeds would be paid to Nancy's children. b.The policy proceeds would revert back to the insurance company. c.The policy proceeds would be paid to Nancy's estate. d.The policy proceeds will be paid to Jack's estate.

The policy proceeds will be paid to Jack's estate.

Nancy is the beneficiary on Jack's Life policy and daughter Cassie is the contingent beneficiary. Nancy and Jack are involved in a serious car accident, which kills Jack instantly. Nancy is on life support for two weeks and then dies. What will happen under the Simultaneous Death Act? Select one: a.The policy proceeds will be paid to Cassie. b.The policy proceeds will be paid to Jack's estate. c.The policy proceeds will be distributed among Nancy and Jack's surviving children. d.The policy proceeds will be paid to Nancy's estate.

The policy proceeds will be paid to Nancy's estate. (If the primary beneficiary lived even 30 seconds longer than the Insured, the primary beneficiary gets the money. Nancy gets the money because Jack and Nancy did not die at the same time. This is a good example of why Jack should have put a Common Disaster Provision in the policy.)

A contingent beneficiary will receive the death benefit only if: Select one: a.The primary beneficiary dies before the Insured. b.The Insured dies before the primary beneficiary.

The primary beneficiary dies before the Insured.

Which of the following will an AD&D policy cover? Select one: a.Military service losses. b.Sicknesses. c.Traveling as a fare-paying passenger on a regularly scheduled flight. d.Self-inflicted wounds.

Traveling as a fare-paying passenger on a regularly scheduled flight.