chapter 4. life policy provisions, riders an options

for how long is an insurance company allowed to defer policy loan req.

6 months

Standard Provisions

Entire contract Payment of premiums Grace period Reinstatement Incontestability Misstatement of age Statements of the insured Legal action Payment of claims

NAIC —

National Association of Insurance Commissioners, an organization composed of insurance commissioners from all 50 states, the District of Columbia and the 5 U.S. territories, formed to resolve insurance regulatory issues

which of the following determines the length of time that the benefits will be recieved under the fixed amount settlement opinion?

Size of each installment

Contingent beneficiary

a beneficiary who has second claim to the policy proceeds after the death of the insured (usually after the death of the primary beneficiary)

Primary beneficiary

a beneficiary who has the first claim to the policy proceeds after the death of the insured

In a case where the primary beneficiary predeceases the insured, in the event of the insured's death, the death benefit proceeds will be paid to

a contingent beneficiary

activities of daily living (ADLs)

a person's essential activities that include bathing, dressing, eating, transferring, toileting, continence

Trust —

an arrangement in which funds or property are held by a person or corporation for the benefits of another person (trust beneficiary)

What limits the amount that a policyowner may borrow from a whole life insurance policy?

cash value

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

class designation

When the policyowner specifies a dollar amount in which installments are to be paid, he/she has chosen which settlement option?

fixed amount

an individual purchased a life insurance policy on his life naming his wife as the primary beneficiary and his daughter as the contingent beneficiary. Under what circumstances could the daughter collect the death benefit?

if the primary beneficiary predeceases the insured.

During partial withdrawal from a universal life policy, which portion will be taxed?

interest

what is the purpose of a free-look period in insurance policies

it allows the insured to reject the policy with a full refund

which of the following statements about the reinstatement provisions is true?

it req. the policy owner to pay all overdue premiums with interest before the policy is reinstated

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

life income with period certian

all of the following are true reguarding insurance policy loans EXCEPT

policy loans can be ,ade on policies that do not accumulate cash value

an insured pays $1,200 annually for her life insurance premium. The insured applies this year's 300 worth of accumalated divedends to the next years premium, thus reducing it to 900. what option does ths describe?

reduction of premium

Principal amount

the face value of the policy; the original amount invested before the earnings

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

the loan amount is deducted from the death benefit

Assignment

transfer of rights of policy ownership

the insured had his wife names as the beneficiary of his life 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 insureds age at death