Life Provisions & Riders Quiz

Joe purchased a life insurance policy with a $100,000 death benefit and added the Accidental Death Rider, paying double indemnity for an accidental death. Joe lied about having had open heart surgery last year, on his application. 3 years later, Joe dies of a heart attack. How much does his beneficiary receive?

200000

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

50000

All of the following are examples of 3rd party ownership, except...

An insured does a collateral assignment of their policy over to the bank to take out a loan.

The owner makes changes to his life insurance policy without letting the beneficiary know. How is this accomplished?

Beneficiaries are set up as revocable

The answers on the application constitute a part of which of the following...

Consideration

Which provision prevents the insurer from referencing any document not contained in the contract if you have to go to court?

Entire Contract

Which non-forfeiture option provides the highest amount of coverage?

Extended Term

Which nonforfeiture option has the highest amount of insurance protection?

Extended Term

Joe didn't list a beneficiary on his life insurance policy. When he died it became part of his estate. What are the tax consequences?

Fully taxable

Joe purchases a life insurance policy with a $50,000 death benefit. While this is all the insurance he feels he can afford at this time, he wants to make sure that he can get additional coverage in the future. Which rider should be included in his policy?

Guaranteed Insurability Rider

If a life policy allows the policyowner to make periodic additions to the face amount at standard rates, without proving insurability, the policy includes a

Guaranteed insurability rider

Joe purchases a $100k life insurance policy with the Accidental Death Rider, paying double indemnity. His policy does not contain a war clause. 1 year after purchasing the policy, Joe gets deployed to the Middle East. After being there for a week, Joe is killed in an automobile accident. How does the insurer handle paying out of the death benefit?

His beneficiary will receive $200k

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

Incontestability Clause

Which provision states the insurers promising to pay benefits?

Insuring Clause

Which of the following is true about the premium on the children's rider in a life insurance policy?

It remains the same no matter how many children are added to the policy.

Joe's agent delivered his policy on June 1st. Underwriting began on the policy on May 1st. Joe had a paramedical exam on May 15th and the policy was issued on May 20th. When does the free look begin?

June 1st

If a settlement option is not chosen by the beneficiary or policyowner, which option will be used?

Lump sum

What is the other term for the cash payment settlement option?

Lump sum

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

Mode

An insured is in a car accident. He permanently loses the use of his leg and is blinded in one eye. Under the Presumptive Disability Provision, to what extent will he receive benefits?

None.

Which option is being utilized when the insurer accumulates dividends at interest and then uses the accumulated dividends, plus interest, and the policy cash value to pay the policy up early?

Paid-up option

Joe took out a policy on his daughter. Joe became disabled in a car accident. His daughter's policy stays in effect, even though Joe hasn't paid premiums for a few months. Which rider does the policy contain?

Payor Benefit Rider

Which rider allows for the premium payments to be relieved for the insured in case the policyowner dies or becomes disabled?

Payor Benefit.

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?

Proof of insurability is not required

When a whole life policy is surrendered prior to maturity, the cash value can be used to

Purchase a single premium policy for a reduced face amount

Which of the following determines the length of time that benefits will be received under the Fixed-Amount settlement option?

Size of each installment

Which of the following riders is often used in business life insurance policies when the policyowner needs to change the insured?

Substitute insured rider

Which of the following, when attached to a permanent life insurance policy, allows the policyowner to customize the policy to provide an additional amount of temporary insurance on the insured, or allows amounts of temporary insurance to cover other family members?

Term rider

Which is NOT true about beneficiary designations?

The beneficiary must have insurable interest in the insured

In a case where the primary beneficiary predeceases the insured, in the event of the insured's death, the death benefit proceeds will be paid to

The contingent beneficiary

A life insurance policy does not have a war clause. If the insured is killed during a time of war, what will the beneficiary receive from the policy?

The full death benefit

Under which non-forfeiture option does the company pay the surrender value and have no further obligations to the policyowner?

Cash surrender

Joe goes to the bank to get a loan for $50,000 to fund his new business. The bank wants more in trade than Joe has. The bank will let Joe use his life insurance policy to back the loan. What has Joe done?

Collateral Assignment

What is the clause that describes the method of paying the death benefit in the event that the insured and beneficiary are both killed in the same accident?

Common Disaster Clause

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?

The insured's premiums will be waived until she is 21

All of the following are true regarding the guaranteed insurability rider EXCEPT

This rider is available to all insureds with no additional premium

What is the purpose of a fixed-period settlement option?

To provide a guaranteed income for a certain amount of time

When would a contingent beneficiary receive a death benefit?

When the primary beneficiary predeceases the insured