Life Provisions

Which of the following is considered to be an alternative to a life settlement?

Accelerated death benefit rider.

Which of the following protects a policyowner from a misrepresentation caused by an innocent mistake?

Incontestable Clause. This clause protects policyowners from a misrepresentation caused by his/her own innocent mistake.

In order to activate the reinstatement clause of a lapsed life insurance policy, the insured MUST:

The insured must provide evidence of insurability to the insurer.

A life insurance policyowner does NOT have the right to:

Revoke an absolute assignment

All of the following are considered to be nonforfeiture options available to a policyowner EXCEPT:

EXCEPT: Reduction of Premium The following are excluded: 1. Extended Term 2. Cash Surrender 3. Reduced Paid-Up Insurance

Which of these is NOT a characteristic of the Accelerated Death Benefit option?

The benefit can be offered as a rider at a specific extra cost or may be at no cost. Accelerated Death options are offered with NO increase in premium.

A provision in a whole life policy that allows a policyowner to terminate the policy in return for a reduced paid-up policy of the same type is called a (n):

Nonforfeiture Provision. A nonforfeiture provision in a cash value life insurance policy allows a policyowner to terminate the policy in return for a reduced paid-up policy of the same type.

Kurt is an active duty serviceman who was recently killed in an accident while home or leave. Which military service exclusion clause would pay upon his death?

Results: The "results clause" states the insurer is excused from paying the amount only if the death is a result of war.

Pat owns a 20-pay life policy with a paid-up dividend option. Which of the following statements is true?

The policy may be paid up early by using policy dividends. In this situation, the insured may pay up the policy early by using policy dividends.

Ron has a life insurance policy with a face value of $100,000.00 and a cost of living rider. If the consumer price index has gone up 4%, how much may Ron increase the face value of the policy?

$4,000.00. Ron may increase the face value of his policy by $4,000.00. MATH: $100,000.00x0.04=$4,000.00

A provision that allows a policyowner to withdraw a policy's cash value interest free is a (n)

A partial surrender allows the policyowner to withdraw the policy's cash value interest free.

Ownership of a life insurance policy may be temporarily transferred with a (n):

Collateral assignment. An owner of a life insurance policy may transfer ownership temporarily with a collateral assignment.

Life insurance policies will normally pay for losses arising from:

Commercial Aviation

A life insurance policyowner was injured in an automobile accident which results in a total and permanent disability. Which rider would pay a monthly amount because of this disability?

Disability Income Rider

Matt is applying for life insurance and requests a double indemnity rider. A double indemnity benefit will be payable to Matt's beneficiary if Matt...

Matt's beneficiary will be provided with the double indemnity rider if Matt dies instantly from a car accident.

What is an insurance policy's grace period?

Period of time after the premium is due but the policy remains in force.

An insured individual and the policy's beneficiary die from the same accident. The common disaster provision states the insurer will continue as if:

The insured outlived the beneficiary. A common disaster provision states that if the beneficiary dies from the same accident as the insured individual, the insurer will proceed as if the insured outlived the beneficiary. This allows the proceeds to go to the contingent beneficiary.

A provision that allows a policyowner a temporarily give up ownership rights to secure a loan called a (n)

Collateral Assignment

What is an insurer required to do when faced with an error made under the Misstatement of Age provision?

Pay age-corrected benefits.

A provision that allows a policyowner to temporarily give up ownership rights to secure a loan is called a (n)

Collateral assignment. A collateral assignment provision allows a person to temporarily give up a portion of their ownership rights to secure a loan.

All of these are common exclusions to a life insurance policy EXCEPT:

EXCEPT: Accidental Death All of these are non exclusions: 1. Military Service 2. Aviation 3. Hazardous Occupations

All of these are standard exclusions found in a life insurance policy EXCEPT:

EXCEPT: Disability The Following are excluded: 1. Hazardous Occupations 2. Aviation 3. War

Which type of rider will waive the premium on a child's life insurance policy if the parent paying the premium dies?

Payor Benefit. A payor benefit will waive the premium on a juvenile life insurance policy if the parent paying the premium dies.

Which of the following is a reinstatement condition?

Proof of insurability.

The free-look provision gives the policyowner

The right to return the policy for a full refund within a specified number of days.

James is the insured on a life insurance policy where his age was misstated on the application. Which of the following is Correct regarding the death benefit amount?

The death benefit paid will be what the premium would have purchased at the correct age. Under the Misstatement of Age provision, the amount paid will be what the premium would have purchased at the correct age.

A life insurance rider that allows an individual to purchase insurance as they grow older, regardless of insurability, is called a (n)

A guaranteed Insurability rider

A whole life insurance policy accumulates cash value that becomes:

The policy loan value which the insured may borrow against. The accumulation cash value of a whole life insurance policy becomes the policy loan value upon which the insured may borrow.

Which of these is NOT considered to be a nonforfeiture option in a whole life insurance policy?

Interest only. Cash surrender, extended term insurance, and reduced paid-up insurance are all exceptions.

Loans obtained by a policyowner against the cash value of a life insurance policy

Would not be treated as a taxable income. Loans may generally be obtained against the cash value of a personal life insurance and are not treated as taxable income.

A whole life policy option where extended term insurance is selected is called a (n)

A nonforfeiture option. A nonforfeiture provision in a whole life policy that uses cash value to purchase term insurance equal to the existing amount of life insurance is called the extended term option.

Which dividend option would insurer invest the policyowner's money and add any interest earning as the dividends accrue?

Accumulation at interest option. The accumulation at interest option invest the policyowner's money and adds interest earning to the initial amount of the dividends.

Of the following dividend options, which of these is taxable?

Accumulation at interest. The accumulation at interest is a taxable dividend option.

An insurer will accept a premium from the insured and continue the coverage in full force as though it was NOT late during which time period?

Grace Period.

An error was made on Mary's life insurance application. Which of the following areas do errors commonly occur on applications and for which the incontestable clause does NOT apply?

Age. The incontestable clause does not apply to the misstatement of age provision.

A life insurance policy normally contains a provision that restricts coverage in the event of death under all of the following situations EXCEPT:

Fare-Paying passenger. A policy may contain provisions excluding or restricting coverage as specified in the event of death under all of the these situations EXCEPT a fare-paying passenger.

Which of these is NOT considered to be a common life insurance nonforfeiture option?

Life Income annuity. Exceptions included: Cash surrender, extended term insurance, and reduced paid-up insurance.

Which of these would limit a company's liability to provide insurance coverage?

Exclusion. An exclusion is a condition which limits the company's liability to provide coverage.

A policyowner may exercise which of these divided options that uses the dividend to pay all or part of the next premium due?

Reduction of premium dividend option. The reduction of premium dividend option allows a policyowner to use the dividend to pay all of part of the next premium due on the policy.