chapter 3: terms
children's riders attached to whole life policies issued as what type of insurance?
Term
lump sum
payment of the entire benefit in one sum
Common Disaster Clause
When insured and primary die at the same time, it is assumed that the primary died first
indeminty
a principle reimbursement on which insurance is based; in the event of loss, an insurer reimburses the insurers or beneficiaries for the loss
In the state of Florida, life insurance policies must have ....
14 day free look period
Grace Period
A time period during which no finance charges will be added to your account
what are three nonforfeiture options?
Cash surrender, reduced paid-up, and extended term
When the insured selects the extended term nonforfeiture option, the cash value will be used to purchase term insurance with what face amount?
Equal to the original policy for as long as the cash values will purchase.
Fixed Period
Payments are guaranteed for a specified period of time.
the ownership provision entitles the policy owner to do all of the following except
Set premium rates
Collateral Assignment
The policyowner temporarily assigns a life insurance policy to a creditor as collateral for a loan (partial rights)
If a settlement option is not chosen by the policy owner or the beneficiary, what option will be used by the insurer?
lump sum
Consideration
something of value that each party gives to the other
cash value
the amount received after giving up a life insurance policy
Paid-Up Additions
the dividend is used to purchase a small amount of paid-up whole life insurance
assignment
transfer of rights of policy ownership
Which of the following premium payment modes will incur the lowest overall payment?
annual
revocable
capable of being revoked or canceled
Regarding the free-look provision, the insurance company
must allow the policy owner to return the policy for a full refund
Pay benefit rider
primarily used with juvenile policies
other insured rider
provides coverage for one or more family members other than the insured
The life insurance policy clause that prevents an insurance company from denting payment of death claim after a specified period is known as the
Incontestability clause
The policy owner 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 policy owner choose?
Interest option
fixed amount
The fixed amount installment option pays a fixed death benefit in specified installment amounts until the proceeds are exhausted. The larger the installment payment the shorter the payout period.
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.
Contingent Beneficiary
a beneficiary who has second claim to the policy proceeds after the death of the insured (usually after death of the primary beneficiary)
Primary Beneficiary
a beneficiary who has the first claim to the policy proceeds after the death of insured.
Minor
a person under legal age
Absolute Assignment
all ownership rights in the policy are transferred to a new owner
Policy Loan
an advance, secured by the cash value of a whole life insurance policy, made by an insurer to the policyholder
activities of daily living (ADLs)
personal daily care tasks, including bathing, skin, nail, and hair care, walking, eating and drinking, mouth care, dressing, transferring, and toileting
Principal
the face value of the policy; the original amount invested before the earnings
A father purchases a life insurance policy on his teenage daughter and adds the Payor Benefit rider. In which of the following scenarios will the rider waive the payment of premium?
-If the father is disabled for more than 6 months Payor benefit only pays if the owner, the father in this example, is disabled for at least 6 months.
Automatic Premium Loan
Allows the insurer to borrow from the cash value to pay unpaid premium after grace period expires. It makes sure that the policy does not lapse
What provisions in an insurance policy extends coverage beyond the premium due date?
Grace period
Which of the following is true of a children's rider added to an insured's permanent life insurance policy?
It is TERM coverage that is convertible to permanent insurance at or prior to the child reaching the maximum coverage age.
NAIC
National Association of Insurance Commissioners, an organization composed of insurance Commissioners from all states and jurisdictions formed to resolve insurance regulatory issues
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.
Which of the following, when attached to permanent life insurance policy, allows the policy owner 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
Free Look Period
allows the policyowner a specified number of days from receipt to look over the policy and if dissatisfied for any reason return it for a full refund of premium. The free look period starts when the policyowner receives the policy, not when the insurer issues the policy.
spouse term rider
allows the spouse to be added to coverage for a limited period of time and for a specified amount.. the rider is usually term level insurance and usually expires when the spouse turns 65
Waver of Premium
waived the premium if the insured becomes totally disabled 6-month waiting period before benefits begin
Uniform Simultaneous Death Act
It directs that in life insurance if the insured and the primary beneficiary die at the same time the policy benefits are payable as if the insured outlived the beneficiary.