Exam 2: chapter 4

Pay back the loan amount to keep the policy's cash value at its maximum

A policyowner with an automatic premium loan provision must

Uses the $10,000 to buy term insurance of the same face amount as her original policy

Susan owns a life insurance policy that has accumulated $10,000 in cash value in which she can no longer pay its premiums. If she elects to take the extended term option, which of these actions would she take?

Policy dividends cannot be guaranteed

Which of these is a correct statement?

Collateral assignment

Which type of assignment transfers a portion of the policyowner 's right to another party in order to secure a debt to that party?

A portion of the policy proceeds to the assignee

A collateral assignment allows a policyowner to assign

Extended term

Which of the following is considered the "automatic" Nonforfeiture Option that most insurers will use?

Term rider

Which of the following permanent life insurance policy riders add more coverage for a limited amount of time?

The amount of coverage would be less than the original coverage

A life insurance policyowner has just exercised the policy's reduced paid-up option. Which of these statements is true?

The reduced paid-up coverage minus $5,250

A policyowner with a $100,000 whole life policy has a cash value of $10,000. There is an outstanding loan of $5,000 and a past-due premium of $250. If the policyowner chooses the reduced paid-up option and then later dies, what will the beneficiary receive?

Waives the premiums when the policyowner becomes totally disabled

A waiver of premium

Dies within 90 days of the accident

An accidental death rider claim is usually paid if the insured

The outstanding policy loan exceeds the cash value of the policy

An insurance company may cancel a life insurance policy under which of the following conditions?

The amount of insurance that his premiums would have purchased at his correct age.

John has recently died and it was discovered that he was actually ten years older than was listed on his life insurance policy. What will the insurer pay his beneficiary?

A paid-up permanent policy purchased with $10,000

Peggy surrenders a permanent life policy with a cash value of $15,000 and an outstanding policy loan of $5,000. If she chooses the reduced paid-up option, what will be the result?

Her policy can be returned for 100% refund of the premium within 10 days from the date the policy is delivered

Tina has an insurance policy with a 10-day free look provision. Which of these statements is correct?

Within 3-5 years of the policy lapsing

When can a lapsed insurance policy usually be reinstated?

Paid-up additions option

Which dividend option allows a policy owner to use his/her dividends to buy life insurance on a single premium basis?

Reduced paid-up insurance

Which of the following dividend options allows the continuation of cash value accumulation?

All of the above

Which of the following events would allow a policyowner with a guaranteed insurability rider purchase additional life insurance?

Policy dividends

Which of the following is NOT guaranteed by a whole life policy?

After a policyowner cancels his/her permanent policy, the cash value accumulation must be made available to the policyowner

Which of the following is an example of a "nonforfeiture value"?

Premium was not paid during the grace period

Which of these actions could result in a lapsed policy?

Contains a grace period

Bob has a insurance policy that allows him to keep the policy in force until the next premium is due plus 30 day's thereafter. Bob's policy

The policyowner

Who is considered the individual that retains all rights, values, and options of an insurance policy?

Not guaranteed

Policy dividends for life insurance are

The accumulated cash value($10,000 less interest)

Rick owns a $ 100,000 life insurance policy with a cash value of $10,000. How much can he borrow up to?

An absolute assignment

Ron turned over all rights in his policy over to an assignee. This is called

Resume paying premiums again

Shawn has a waiver of premium ride on his life insurance policy. He becomes disabled for 3 years, during which the insurance company waives $3,000 in premiums. When Shawn recovers, he must

Increasing term policy

The automatic premium loan provision is NOT used in which of the following policies?

Excludes coverage when the insured is riding in certain kinds of air travel

The aviation exclusion

Cost of living rider

Which type of rider allows a policyowner to increase the level of coverage to keep up with inflation?