life policy options, provisions and exclusions
what is the waiting period on a Waiver of Premium rider?
6 months
two types of assignments are
absolute and collateral
what happens when a policy it's surrendered for its cash value
coverage ends and the policy cannot be reinstated
what provision in a life insurance policy extends coverage beyond the premium due date?
grace period
if an insured receives accelerated death benefits, what is the least amount of the original benefit that the beneficiary would receive after the insureds death?
0%
an insured pays an 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
which of the following protects the insured from an unintentional policy lapse due to a nonpayment of premium?
automatic payment loan
a policy owner fails to pay the premium due on his whole life policy after the grace period passes but the policy remains in force. this is due to what provision
automatic premium loan
which of the following best describes fixed-period settlement option?
both the principal and interest will be liquidated over a selected period of time
if a life insurance policy allows the policy owner to make periodic additions to the face amount at standard rates, without providing insurability, the policy includes a
guaranteed insurability rider
what policy component contains the company's promise to pay?
insuring clause
which two terms are associated directly with the premium
level or flexible - level is where the premium payment never changes flexible is found in universal life policies where the insured changes their premium payment
which life insurance settlement option guarantees payments for the lifetime of the recipient but also specifies a guaranteed period during which if the original recipient dies the payments will continue to a designated beneficiary?
life income with period certain
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 and not 43 as stated on the application. What will the company do?
pay a reduced benefit
when a whole life policy lapses or is surrendered prior to maturity, the cash value can be used to
purchase a single premium policy for a reduced face amount
the policy owner 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 allows her to do this?
reduction of premium - this option allows the policy owner to apply policy dividends toward the next years premium
the accelerated death benefits provision will pay for an early payment of the death benefit when the insured is
terminally ill
nonforfeiture values guarantee which of the following for the policy owner?
that the cash value will not be lost
upon the death of the insured, the primary beneficiary discovers that the insured chose the interest only settlement option. what does this mean?
the beneficiary will only receive payments of the interest earned on the death benefit
what is the advantage of reinstating a policy instead of applying for a new one?
the original age is used for premium determination
cash payment option is also known as
lump sum
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 injuries. What amount would his beneficiary receive as a settlement?
200,000
which provision of a life insurance policy states the insurers duty to pay benefits upon the death of the insured and to whom the benefits will be paid?
insuring clause
the policy owner wants to make sure that upon his death, the life policy will pay a portion of the proceeds annually to his spouse, but that the principal will be paid to their children when they reach a certain age. Which settlement option should the policy owner choose?
interest only option - the insurance company retains the policy proceeds and pays interest on the proceeds to the recipient at regular intervals
which of the following is true regarding the reinstatement provision
it requires the policy owner to pay all overdue premiums 27th interest before the policy is reinstated
which rider does not cause the death benefit to increase?
payor benefit rider
which statement is false regarding accumulation at interest option
the interest is not taxable since it remains inside the insurance policy.... the interest credited under this option IS taxable whether or not the policy owner receives it
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 insured had his wife named as the beneficiary of his life insurance policy. To ensure that his wife had income for life after his 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
the rider in a whole life policy that allows the company to forgo collecting the premium if the insured is disabled is called
waiver of premium
which of the following is true regarding nonforfeiture options
they are required by law to be included in the policy
the paid up addition uses the dividend
to purchase a smaller amount of the same type of insurance as the original policy
What is the benefit of choosing extended term as a nonforfeiture option
it has the highest amount of insurance protection
which of the following is true about a policy assignment
it transfers the rights of ownership from the owner to another person
insured has chosen joint and 2/3 survivor as the settlement option. What does this mean to the beneficiaries?
the surviving beneficiary will continue receiving 2/3 of the benefit paid when both beneficiaries were alive
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
if a beneficiary wants a guarantee that benefits paid from principal and interest would be paid for a period of 10 years before being exhausted what settlement option should the beneficiary select?
fixed period
all of the following are TRUE statements regarding accumulation at interest option EXCEPT
the interest is not taxable since it remains inside the insurance policy- interest credited under this option is TAXABLE, whether or not the policy owner receives it
what type of insurance would be used for a Return of Premium rider
increasing term
at the time the insured purchased her life insurance policy, she added a rider that will allow her to purchase additional insurance in the future without having to prove insurability. This rider is called ________
Guaranteed Insurability