Life Policy Provisions, Rider & Options

Who can request changes in premium payment, face values, loans, and policy plans? A. Policyowner B. Contingent beneficiary C. Beneficiary D. Producer

A. Policyowner Mandatory provisions give these rights to the policyowner

Which of the following is TRUE concerning the Accidental Death Rider? A. This rider is only available to insureds over the age of 65 B. It is only available in group insurance C. It will pay double or triple the face amount D. It is also known as a triple indemnity ride r

C. It will pay double or triple the face amount The Accidental Death Rider pays 2 or 3 times the face amount if death is the result of an accident as defined in the policy and occurs within 90 days of such an accident.

Which of the following is true of a children's rider added to an insured's permanent life insurance policy? A. The policy covers only the natural children of the insured B. Each child covered must show evidence of insurability C. It is term coverage that is convertible to permanent insurance at or prior to the child reaching the maximum coverage age D. It is permanent insurance

C. It is term coverage that is convertible to permanent insurance at or prior to the child reaching the maximum coverage age Children's rider is term insurance covering all of the children in the family, including newly born children, and is convertible to permanent insurance upon a child reaching the maximum age without evidence of insurability.

When the insured selects the extended term nonforfeiture option, the cash value will be used to purchase term insurance with what face amount? A. Equal to the cash value surrendered from the policy B. The same as the original policy minus the cash value C. Equal to the original policy for as long as the cash values will purchase D. In lesser amount for the remaining policy term of age 100

C. Equal to the original policy for as long as the cash values will purchase With this option, the cash value is used as a single premium to purchase the same face amount as the original policy for as long a period of time as the cash will buy at the insured's current age.

An insured has a continuous premium whole life policy. She would like to use the policy dividends to pay off her policy sooner than would have been possible otherwise. What dividend option could she use? A. One-year term B. Reduction of premium C. Accumulation at interest D. Paid-up option

D. Paid-up option With the paid-up option, the insurer can accumulate dividends at interest and then use them, in addition to interest and the policy's cash value, to pay the policy earlier than planned. This is different from paid-up additions, in which the dividends are used to buy additional policies that increase the face amount of the original policy

A 40-year old man buys a whole life policy and names his wife as his only beneficiary. His wife dies 10 years later. He never remarries and dies at age 61, leaving 2 grown-up children. Assuming he never change the beneficiary, the policy proceeds will go to A. The insurance company B. The insured's estate C. The insured's firstborn child D. Both children who share equally on a per-capita basis

B. The insured's estate Because there is no viable beneficiary at the time of death, proceeds are paid to the insured's estate

In a case where the primary beneficiary predeceases the insured, in the event of the insured's death, the death benefit proceed will be paid to A. The policyowner B. The insurance company C. The contingent beneficiary D. The insured's spouse

C. The contingent beneficiary A contingent beneficiary receives the death benefit if the primary beneficiary predeceases the insured. If there are no designated beneficiaries surviving the insured, the benefits are paid to the estate of the insured.

The accelerated benefits provision will provide for an early payment of the death benefit when the insured A. Needs to borrow money B. Has earned enough credits C. Becomes disabled D. Becomes terminally ill

D. Becomes terminally ill The accelerated benefits provisions allow the owner to be advanced a significant portion of the death benefit when the insured is terminally ill

Which of the following statements about the reinstatement provision is true? A. It requires the policyowner to pay all overdue premiums with interest before the policy is reinstated B. It permit reinstatement within 10 years after a policy has lapsed C. It provides for reinstatement of a policy regardless of the insured's health D. It guarantees the reinstatement of a policy that has been surrendered for cash

A. It requires the policyowner to pay all overdue premiums with interest before the policy is reinstated Upon policy reinstatement, the policyowner will be required to pay all back premiums plus interest, and may be required to repay any outstanding loans and interest

A father owns a life insurance policy on his 15-year old daughter. The policy contains the optional Payor Benefit rider. If the father becomes disabled, what will happen to the life insurance premiums? A. The insured's premium will be waived until she is 21 B. The premiums will become tax deductible until the insured's 18th birthday C. Since it is the policyowner, and not the insured, who had become disabled, the life insurance policy will not be affected D. The insured will have to pay premium for 6 months. If at the end of this period the father is still disabled, the insured will be refunded the premiums

A. The insured's premium will be waived until she is 21 If the payor (usually a parent or guardian) becomes disabled for at least 6 months or dies, the insurer will waive the premiums until the minor reaches a certain age, such as 21.

Which of the following is TRUE about a class designation? A. Beneficiaries must be part of insured's immediate family B. It is not allowed C. It determines the succession of beneficiaries D. Beneficiaries are not identified by name

D. Beneficiaries are not identified by name A class of beneficiary is using a designation such as "my children". This can be vague term if the insured has been married more than once, or has adopted or illegitimate children. Many insurers encourage the insured to name each child specifically and to state the percentage of benefit they are to receive

A couple owns a life insurance policy with a Children's Term rider. Their daughter is reaching the maximum age of dependent coverage, so she will have to convert to permanent insurance in the near future. Which of the following will she need to provide for proof of insurability? A. Proof of insurability is not required B. Medical exam C. Her parents' federal income tax receipts D. Medical exam and parents' medical history

A. Proof of insurability is not required If a Children's Term rider is attached to a life insurance policy, children can be covered under the policy until they reach the maximum age stated in the policy. At that point, they can covert their coverage to a new policy without having to issue proof of insurability

Which nonforfeiture option has the highest amount of insurance protection? A. Reduced Paid-up B. Extended Term C. Conversion D. Decreasing Term

B. Extended Term The Extended Term nonforfeiture option has the same face amount as the original policy, but for a shorter period of time.

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? A. Reduction of Premium B. Accumulation at Interest C. Cash option D. Flexible Premium

A. Reduction of Premium The Reduction of Premium option allows the policyholder to apply policy dividends toward the next year's premium. The dividend is subtracted from the premium amount, yielding the new premium due for the next year.

When a reduced-paid up nonforfeiture option is chosen, what happens to the face amount of the policy? A. It remains the same as the original policy, regardless of any differences in value B. It is reduced to the amount of what the cash value would buy as a single premium C. It is increased when extra premium are paid. D. It decreases over the term of the policy

B. It is reduced to the amount of what the cash value would buy as a single premium In a reduced paid-up policy, the original policy's cash value is used as single premium to pay for a permanent policy with a reduced face amount from the original, hence the name. The new policy accumulates in cash value until its maturity or the insured's death

Which two terms are associated directly with the premium? A. Term or permanent B. Renewable or convertible C. Level or flexible D. Fixed or variable

C. Level or flexible A level premium is one in which the premium payment never changes. A flexible premium is found in Universal life policies where the insured changes their premium payment

Which is true about a spouse term rider? A. Coverage is allowed for an unlimited time B. The rider is decreasing term insurance C. Coverage is allowed up to age 75 D. The rider is usually level term insurance

D. The rider is usually level term insurance The spouse term rider allows a spouse to be added for coverage. It is available for a limited amount of time, typically expiring at age 65. A spouse term rider (just like any other insured rider) is usually level term insurance.