Chapter 3: policy riders, provisions, options, and exclusions ( quiz material)

If a settlement option is not chosen by the policy owner or the beneficiary, what option will be used by the insurer?

Lump-sum payment

After a back injury, an insured is disabled for a year. His insurance policy carries a Disability Income Benefit rider. Which of the following benefits will he receive?

Monthly premium waiver and monthly income

What is the advantage of reinstating a policy instead of applying for a new one?

The original age is used for premium determination

What is true about dividends?

- lower insurance company costs generate higher dividends - they stem from favorable underwriting experience - favorable investment results generate higher dividends

What is the waiting period on a Waiver of Premium rider in life insurance policies?

6 months

The accelerated benefits provision will provide for an early payment of the death benefit when the insured

Becomes terminally ill

Which of the following best describes fixed- period settlement option?

Both the principal and interest will be liquidated over a selected period of time.

Long-term care coverage may be available as any of the following options except:

Endorsement to a health policy

Which nonforfeiture option has the highest amount of insurance protection?

Extended term

Which rider, when attached to a permanent life insurance policy, provides an amount of insurance on every family member?

Family term rider

Most LTC plans have which of the following features?

Guaranteed renewability

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

Insuring clause

The policyowner wants to make sure 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

The type of settlement option which pays throughout the lifetimes of two or more beneficiaries is called

Joint and survivor

Which life insurance settlement option guarantees payments for the lifetime of the recipient, but also specifies a guaranteed period, during which, if the original recipient dies, the payments will continue to a designated beneficiary?

Life income with period certain

A couple owns a life insurance policy with a Children's Term rider. Their daughter is reaching the maximum age of dependent coverage, so she will have to convert to permanent insurance in the near future. Which of the following will she need to provide for proof of insurability?

Proof of insurability is not required.

When an insured under a life insurance died, the designated beneficiary received face amount of the policy, as well as a refund of all of the premiums paid. When rider is attached to the policy?

Return of premium

The interest earned on the dividend is

Taxable

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

Term

Which of the following one 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 amount of temporary insurance to cover other family members?

Term Rider

The accelerated benefits provision will provide for an early payment of the death benefit when when the insured becomes

Terminally ill

Nonforfeiture values guarantee which of the following for the policyowner?

That the cash value will not be lost

If a life insurance policy has an irrevocable beneficiary designation,

The beneficiary can only be changed with written permission of the beneficiary

Upon the death of the insured, the primary beneficiary discovers that the insured chose the interest only settlement option. What does this mean?

The beneficiary will only receive payments of the interest earned on the death benefit.

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

The insured had his wife named as the beneficiary of his life insurance policy. To ensure that his wife had income for life after the insured's death, he chose the life income settlement option. The amount of payments will be determined by taking into account all of the following EXCEPT

The insured's age at death

If an insured under a variable life insurance policy dies, how will the insurer respond to outstanding policy loans?

The loan amounts are deducted from the death benefit.

If a beneficiary wants a guarantee that benefits paid from principal and interest would be paid for a period of 10 years before being exhausted, what settlement option should the beneficiary select?

fixed period

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

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