Individual Life Insurance Contract - Provision and Options

The interest earned on dividends is

taxable

An insured owns a $50,000 whole life policy. At age 47, the insured decides to cancel his policy and exercise and extended term option for the policy's cash value, which is currently $20,000. What would be the face amount of the new term policy?

$50,000

The validity of coverage under a life insurance policy may not be contested, except for nonpayment of premium, after the policy has been in force for at least how many years?

2 years

A policy owner fails to pay the premium due on his whole life policy after the grace period passed, but the policy remains in force. This is due to what provision?

Automatic premium loan

All of the following are divided options EXCEPT A. Reduction of premium. B. Paid-up additions. C. Fixed-period installments. D. Accumulated an interest.

CORRECT: C. Fixed period installments

All of the following are beneficiary designations EXCEPT A. Contingent. B. Primary. C. Specified. D. Tertiary.

CORRECT: C. Specified

An insured and his wife are both involved in a head-on collision. The husband dies instantly, and the wife dies 15 days later. The company pays the death benefit to the estate of the insured. This indicates that the life insurance policy had what provision?

Common Disaster

A policy owner who is also the insured wants to name her husband as the beneficiary of her life policy. She also wishes to retain all of the rights of ownership. The policy owner should have her husband named as the

Revocable beneficiary

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.

When a life insurance policy was issued, the policy owner designated a primary and a contingent beneficiary. Several years later, both the insured and the primary beneficiary died in the same car accident, and it was impossible to determine who died first. Which of the following. Would receive the death benefit?

Insured's contingent beneficiary

An insured pays $1,200 annually for her life insurance premium. The insured applies this year's $300 worth of accumulated dividends to the next year's premium, thus reducing it to $900. What option does this describe?

Reduction of premium

Which of the following is True about nonforfeiture values?

They are required by state law to be included in the policy.