*chapter four exam questions
An insured has a $25,000 whole life insurance policy with $6000 cash value available under the extended term non-forfeiture option what is the amount of insurance available to the insured
$25,000 The extended term option uses the policies cash value to purchase a level term insurance policy in an amount equal to the policy face value for as long a period as the cash value will purchase
Payor Benefit (rider)
A rider found in juvenile policies which waives the premiums if the person paying them (often the parent) is disabled or dies while the child is still a minor.
Guaranteed Insurability Rider
Allows insured to purchas additional amounts of disability income insurance at future dates - future dates are policy anniversary dates -added coverage can be attained but must prove income increase - AKA Additional Purchase or Future Increase Option
Which statement regarding the waiver for premium rider is accurate
Cash payment is not directly provided to the policy owner
Which statement regarding the waiver of premium rider is accurate
Cash payment is not directly provided to the policyowner
Which of the following is not a condition that must be met for an accidental death benefit to be paid
Cause of death must be from a job related injury
Waiver of Premium
Continuation of life insurance coverage if the insured becomes totally disabled and is unable to pay the premiums.
Which of the following is not guaranteed in a whole life policy
Dividend scale
Scott has a life insurance policy in which the dividends are left with the insurance company. This particular policy may be paid up with the cash value plus accumulated dividends
Equal the net single premium for the face amount at the insureds attained age
Which life insurance policy option allows the policy owner to have coverage equal to the net death benefit of the lapsed policy
Extended term nonforfeiture option
Payor Benefit Rider
Found in juvenile polices which waivers the premiums if the person paying them (often the parent) is disabled or dies while the child is still a minor
What is the name of the writer that provides an additional purchase option in a life insurance policy
Guaranteed insurability rider
Define nonforfeiture
Is an insurance policy clause stating that and insured party can receive full or partial benefits or a partial refund of premiums after a lapse due to non-payment
Which of these would not be a valid reason to add the waiver of premium rider to a life insurance policy
It allows a policy loan to cover premium payments if the policy owner becomes totally disabled
Which of these would not be a valid reason to add the waiver of premium rider to the life insurance policy
It allows a policy loan to cover premium payments if the policyowner becomes totally disabled
Joe is a life insurance policy owner who has failed to pay interest on his policy loan. What will result from this nonpayment
Loan amount is increased to reflect the amount of interest due
Waiver of Premium Rider
Optional rider that requires an insurer to assume payment of premiums should the insured become totally disabled for six months for the duration of the disability.
A life insurance guaranteed insurability rider gives the insured the right without providing insurability to
Periodically purchase additional insurance
What happens to a life insurance policy when the policy loan balance exceeds the cash value
Policy will no longer be in force
How was the insured protected if a payor benefit rider is attached to the life insurance policy?
Premium payments are waived in the event the premium payor dies or becomes disabled
which statement regarding the life insurance premium for a child rider is true
Premium remains the same no matter how many children
The automatic premium loan provision can be accurately described as
Provision that provides a policy loan to pay any premiums by the end of the grace period The automatic premium loan provision authorizes a policy loan to pay an overdue premium at the end of the grace period
What effect in a long-term care benefit rider have on a life insurance policy
Reduced death benefit. If used toward the cost associated with assisted living or nursing home confinement a long-term care benefit will reduce the life insurance policies death benefit
Life insurance policy owner would like a dividend option that results in a limited current outlay of funds. Which dividend option would be chosen
Reduction of premium payment
Which of the following is true regarding a person receiving a waiver of premium benefit
The insured must be disabled for a period of time
What is considered the collateral on a life insurance policy loan
The policies cash value
What happens when a policy owner borrows against the cash value of his life insurance policy?
The policy proceeds would be reduced by the outstanding loan balance
What happens when a policy owner borrows against the cash value of his life insurance policy
The policy proceeds would be reduced by the outstanding loan balance If a life insurance policy owner borrows against the cash value of a policy the outstanding loan balance is deducted from the policy proceeds.
Which of these statements regarding the extended term insurance nonforfeiture option in a life policy is accurate
The premium to purchase the coverage comes from the policies cash value
Life insurance policy that includes a return of premium rider will pay the beneficiary how much upon an insured's death
Total premiums paid plus the policy face amount
Nonforfeiture definition
Under this option the insured returns the policy to the insurance company and the life insurance company pays out the current value of the policy
Return of Premium Rider
Upon death, death benefit is paid + the aggregate of premiums paid to date
After the extended term life nonforfeiture option is chosen the available insurance will be
level term for a stated period of time
When a lapsed policy's premium has been paid current, it has the potential of being
reinstated
Waiver of Premium Rider
should the owner be disabled and cant earn an income, after 6 months, all premiums will be paid by the insurer during the disability period; After 6 months, the premiums will be repaid