Chapter 3 (part 2)

S buys a $50,000 whole life policy with a $50,000 Accidental Death and Dismemberment rider. S dies 1 year later of natural causes. How much will the insurer pay the beneficiary?

$50,000

P purchases a $50,000 term life insurance policy in 2005. One of the questions on the application ask if P engages in scuba diving, to which P answers "No". The policy is then issued with no scuba exclusions. In 2010, P takes up scuba diving and dies in a scuba-related accident in 2011. What will the insurer pay to P's beneficiary?

$50,000 minus any outstanding policy loans

The Consideration clause in a life insurance contract contains what pertinent information?

Amount of premium payments and when they are due

S has a Whole Life policy with a premium payment due soon. Which provision would keep the policy in force if S does not make the required payment and the policy has adequate cash value from which the premium payment can be made?

Automatic Policy Loan

N is covered by a Term Life policy and does not make the required premium payment which was due August 1. N dies September 15. What action will the insurer take?

Claim will be denied

How do life insurance companies handle cases where the insured commits suicide within the contract's stated Contestable period?

Claims are denied under the Suicide clause of the policy

Which statement regarding the Misstatement of Age provision is considered to be true?

Coverage will be adjusted to reflect the insured's true age if a misstatement of age is discovered

What provision in a life insurance policy states that the application is considered part of the contract?

Entire Contract provision

Which of these statements about a Guaranteed Insurability Option rider is NOT TRUE?

Evidence of insurability is required when the option is exercised

D is the policyowner and insured for a $50,000 life insurance policy. The beneficiary is D's wife. D and his wife divorce and D remarries, transferring ownership of his policy to his new wife. If D dies without making any further changes, to whom will the policy proceeds be paid to?

Ex-wife

An insured is past due on his life insurance premium, but is still within the Grace Period. What will the beneficiary receive if the insured dies during this Grace Period?

Full face amount minus any past due premiums

All of these statements about the Waiver of Premium provision are correct EXCEPT

Insured must be eligible for Social Security disability for claim to be accepted

In a Life insurance contract, an insurance company's promise to pay stated benefits is called the

Insuring clause

Which of these are NOT an example of a Nonforfeiture option?

Life Income

Which of these is NOT considered to be a right given to a policyowner?

Modify a provision in the insurance contract

Which of the following statements is CORRECT about accelerated death benefits?

Must have a terminal illness to qualify

P is the insured on a participating life policy. Which statement is true if P's premiums are waived due to a disability?

P will still receive declared dividends

M had an annual life insurance premium payment due January 1. She died January 10 without making the premium payment. What action will the insurer take?

Pay face amount minus the past due premium

Which of the following provisions guarantees that premiums will be waived if a Juvenile Life policyowner becomes disabled?

Payor clause

A provision in a life insurance policy that pays the policyowner an amount that does not surpass the guaranteed cash value is called the

Policy Loan provision

Which of these Nonforfeiture Options continue a build-up of cash value?

Reduced Paid-Up

Which of these life insurance riders allows the applicant to have excess coverage?

Term rider

What does the ownership clause in a life insurance policy state?

Who the policyowner is and what rights the policyowner is entitled to

When does a Guaranteed Insurability Rider allow the insured to buy additional coverage?b

at future dates specified in the contract with no evidence of insurability required

The automatic premium loan provision is designed to

avoid a policy lapse

S would like to use dividends from her life insurance policy to purchase paid-up additions. All of these would be factors that determine how much coverage can be purchased EXCEPT

beneficiary's age

The incontestable clause allows an insurer to

contest a claim during the contestable period

When an insurer issues a policy that refuses to cover certain risks, this is referred to as a(n)

exclusion