Life insurance policy provisions, options and riders

An individual purchased a $100,000 joint life policy on himself and his wife. Eight years later, he died in an automobile accident. How much will his wife receive from the policy?

$100,000

An insured purchased a 15-year level term life insurance policy with a face amount of $100,000. The policy contained an accidental death rider, offering a double indemnity benefit. The insured was severely injured in an auto accident, and after 10 weeks of hospitalization, died from the injuries. What amount would his beneficiary receive as a settlement?

$200,000

The two types of assignments are

Absolute and collateral

The accelerated benefits provision will provide for an early payment of the death benefit when the insured

Becomes terminally ill

What license or licenses are required to sell variable annuities?

Both a life insurance license and a securities license

Which of the following best describes fixed-period settlement option?

Both the principal and interest will be liquidated over a selected period of time.

An insured pays the annual premium to his insurer. In return, the insurer promises to pay benefits in accordance with the terms of the contract. This is called

Consideration

The provision which states that both the policy and a copy of the application form the contract between the policyowner and the insurer is called the

Entire Contract

Which policy component decreases in decreasing term insurance?

Face amount

Which is TRUE about cash surrender nonforfeiture option?

Funds exceeding the premium paid are taxable as ordinary income.

An individual is purchasing a permanent life insurance policy with a face value of $25,000. While this is all the insurance that he can afford at this time, he wants to be sure that additional coverage will be available in the future. Which of the following options should be included in the policy?

Guaranteed insurability option

The life insurance policy clause that prevents an insurance company from denying payment of a death claim after a specified period of time is know as the

Incontestability clause

Annually renewable term policies provide a level death benefit for a premium that

Increases annually

What is the benefit of choosing extended nonforfeiture option?

It has the highest amount of insurance protection

Which of the following statements is TRUE about a policy assignment?

It transfers rights of ownership from the owner to another person.

Which of the following is NOT true regarding a straight life policy?

It's premium steadily decreases over time, in response to its growing cash value.

A married couple owns a permanent policy which covers both of their lives and pays the death benefit only upon the death of the first insured. Which policy is that?

Joint Life Policy

Which of the following settlement options in life insurance is known as straight life?

Life Income

Your client wants both protection and savings from the insurance, and is willing to pay premiums until retirement at age 65. What would be the right policy for this client?

Limited pay whole life

after a back injury and insured is disabled for year his insurance policy carries a disability income benefit Rider which of the following benefits will he receive?

Monthly premium waiver and monthly income

Using a class designation for beneficiaries means

Naming beneficiaries as a group

A rider attached to a life insurance policy that provides coverage on the insured's family members is called the

Other-insured rider

Which of the following explains the policy owner's right to change beneficiaries, choose options, and receive proceeds of a policy?

Owner's rights

An insured has had a life insurance policy that he purchased 3 years ago when he was 40 years old. He is killed in an automobile accident, and it is discovered that he is actually 45 years old, not 43, as stated in the application. What will the company do?

Pay a reduced death benefit

Which nonforfeiture option provides coverage for the longest period of time?

Reduced Paid-Up

The policyowner pays for her life insurance annually. Until now, she has collected a nontaxable dividend check each year. She has decided that she would rather use the dividends to help pay for her next premium. What option would allow her to do this?

Reduction of premium

When an insured under a life insurance policy died, the designated beneficiary received the face amount of the policy, as well as a refund of all the premiums paid. Which rider is attached to the policy?

Return of premium

The ownership provision entitles the policyowner to do all of the following EXCEPT

Set premium rates

Nonforfeiture values guarantee which of the following for the policyowner?

That the cash value will not be lost

The policyowner of an adjustable life policy wants to increase the death benefit. Which of the following statements is correct regarding this change?

The death benefit can be increased by providing evidence of insurability.

An insured purchased a 10 year level term policy that is guaranteed renewable and convertible. What happens at the end of the 10 year term?

The insured may renew the policy for another 10 years, but at a higher premium rate.

Which is true about a spouse term rider?

The rider is usually level term insurance

Which of the following is TRUE about nonforfeiture values?

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

I'm a survivorship life policy, when does the insurer pay the death amount?

Upon the last death

Which of the following life insurance policies allows a policyowner to take out a loan from the policy's cash value?

Variable universal life

Which of the following is a key distinction between variable whole life and and variable universal life product?

Variable whole life has a guaranteed death benefit

When would a 20-pay whole life policy endow?

When the insured reaches age 100

A business owner was trying to obtain a bank loan to fund the purchase of a new business facility, but the bank required proof of additional assets to secure the loan. The business owner then decided to use her $250,000 life insurance policy to secure the loan. Which provision makes this possible?

collateral assignment

If a settlement option is not chosen by the policy owner or the beneficiary, what option will be used by the insurer?

lump sum

What is the term for how frequently a policy owner is required to pay the policy premium?

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