Pennsylvania Life Insurance - Provisions

How long can an insurer normally postpone paying the cash value of a surrendered life insurance policy? 2 months 4 months 6 months 12 months

6 months.

A life insurance policy provision that has the potential to decrease the death benefit is called the accelerated (living) benefit insuring clause payor benefit spendthrift clause

accelerated (living) benefit

The automatic premium loan provision can be accurately described as a provision that charges a premium for the right to borrow against the cash value provision that provides a loan for necessary expenditures such as hospital bills, mortgage payments etc provision that automatically waives an unpaid premium at the end of the grace period provision that authorizes a policy loan to pay an overdue premium at the end of the grace period

provision that authorizes a policy loan to pay an overdue premium at the end of the grace period

An insured that has a guaranteed insurability rider attached to his life insurance policy has the ability to purchase life insurance policies on his children as they are born purchase life insurance on a spouse after becoming married purchase additional life insurance at anytime purchase additional insurance at stated intervals

purchase additional insurance at stated intervals

When a lapsed policy's premium has been paid current, it has the potential of being restored renewed reinstated reinstituted

reinstated

What benefit is normally available to a life insurance policyowner who has contracted a terminal illness? Reduced paid-up option Accelerated (living) benefit Return of Premium benefit Extended term option

Accelerated (living) benefit

In what form can an insurance company provide an accidental death benefit on a life policy? As an optional policy rider As a provision of the policy As a nonforfeiture option As a mandatory policy rider

As an optional policy rider

How is a collateral assignment used in a life insurance contract? Assigns permanent ownership rights to a creditor Assigns complete ownership rights to a creditor Assigns specific ownership rights to a creditor Assigns ownership rights to the primary beneficiary

Assigns specific ownership rights to a creditor

Which statement regarding the waiver of premium rider is accurate? Policy loans are used to keep the policy active Cash is not directly provided to the policyowner Insurance companies are required to offer this to all policyowners Premiums are waived in the event of bankruptcy

Cash is not directly provided to the policyowner

In what way is an insurance policy impacted by an accelerated benefit payment? Decreases the premiums Extends the grace period Increases the policy loan balance Decreases the face amount

Decreases the face amount

Which nonforfeiture option allows the policyowner to have coverage equal to the face amount of the lapsed policy? Reduced paid-up option Accelerated benefits option Extended term option Cash surrender option

Extended term option

A life insurance policy that includes a return of premium rider will pay how much upon the insured's death? Face amount plus total premiums paid Face amount plus interest accrued Interest accrued plus total premiums paid Face amount minus any outstanding loan balances

Face amount plus total premiums paid

Which term rider attached to a life insurance policy insures an entire family? Kin Household Family Group

Family

What is the name of the rider that provides an additional purchase option in a life insurance policy? Payor rider Cost of living rider Waiver of premium rider Guaranteed insurability rider

Guaranteed insurability rider

Which life insurance clause disallows an insurance company from challenging the validity of the contract after a stated period of time has passed? Entire contract Grace period Incontestable Insuring

Incontestable

Which situation is an accelerated (living) benefit rider intended for? Insured expected to be confined to a nursing home for life Insured recently had a minor heart attack Insured has lost use of one arm Insured is having dire financial problems

Insured expected to be confined to a nursing home for life

A policyowner has a life insurance policy where she had listed her age on the application as 5 years younger than her actual age. If she dies and the insurer discovers the misstatement of age, how much will the beneficiary receive? Nothing More than the face amount Less than the face amount Full face amount

Less than the face amount.

Which of these is NOT a typical life insurance nonforfeiture option? Reduced paid-up option Extended term option Cash surrender option Life income settlement option

Life Income Settlement Option

What happens to a life insurance policy when the policy loan balance exceeds the cash value? Nonforfeiture options are offered Policy becomes paid-up Automatic premium loan provision is utilized Policy will no longer be in force

Policy will no longer be in force

What happens to the death benefit of a life insurance policy if the insured accepts a payment from the accelerated (living) benefit provision? None will be given Increased Reduced No change

Reduced

What is the end result of an absolute assignment? The assignee receives all incidents of ownership The assignee receives partial incidents of ownership The transfer of ownership is revocable at the discretion of the original policyowner Evidence of insurability must be proven before ownership is transferred

The assignee receives all incidents of ownership

What happens when a policyowner borrows against the cash value of his life insurance policy? The death benefit would be reduced by the outstanding loan balance No additional loans can be taken out in the future The amount borrowed is added to the policyowner's gross income for tax purposes The interest on the loan is tax-deductible

The death benefit would be reduced by the outstanding loan balance

What is considered the collateral on a policy loan? No collateral is needed The policy's cash value The policy's face value The equity in a policyowner's home

The policy's cash value

Which life insurance policy would be eligible to have an automatic premium loan provision? Increasing term Level term Decreasing term Whole life

Whole Life

A source of retirement income for a life insurance policyowner can be derived from the cash value payor benefit consideration face amount

cash value

When the extended term life nonforfeiture option is chosen, the coverage will be increasing term for a stated period of time level term for a stated period of time decreasing term for a stated period of time renewable for a stated period of time

level term for a stated period of time

A life insurance policy's waiver of premium rider has the ability to waive the premium payments in the event the insured becomes financially insolvent waive the premium payments in the event the insured becomes totally disabled provide a policy loan to cover the premium payments in the event the insured becomes totally disabled waive the premiums on this policy as well as any other insurance policies belonging to the insured in the event of total disability

waive the premium payments in the event the insured becomes totally disabled

A policyowner is permitted to take out a policy loan on a whole life policy at what point? When the policy has accrued cash value When the policy has been in force 2 years When the cash value equals the face amount When the policyowner has demonstrated financial need

Accrued cash value.

Which of these would NOT be a valid reason to add the waiver of premium rider to a life insurance policy? Prevents a policy from lapsing in the event of disability Premiums waived by the insurer do not have to be repaid by the policyowner Policy's cash value would still increase as policy premiums are being waived Allows a policyowner to take out a policy loan to cover premium payments in the event of total disability

Allows a policyowner to take out a policy loan to cover premium payments in the event of total disability

In the event of premium default, which life insurance provision will utilize the cash value to keep the policy in force? Waiver of premium Automatic premium loan Reinstatement Policy loan

Automatic Premium Loan

What is payable to a policyowner if a whole life policy is surrendered prior to its maturity date? The loan value The cash value The face amount minus any past due premiums and outstanding loans Nothing

Cash Value

What could be the potential result of taking out a cash value loan on a life insurance policy? Death benefit will be subject to income taxes if insured dies with an outstanding loan balance Interest that accrues on policy loan is tax-deductible to the policyowner Loan amount will be added to the policyowner's gross income Cash surrender value will be reduced if policy is forfeited

Cash surrender value will be reduced if policy is forfeited

Which life insurance policy provision permits a policyowner to cancel the policy within a stated time period and be given a full refund? Grace period Incontestable period Elimination period Free-look period

Free-Look Period

If an insured dies during the grace period without having paid the premium, how much will the insurer pay? Full face amount Total premiums paid will be returned Full face amount minus any premiums due Nothing

Full face amount minus any premiums due

Which of these statements is NOT true regarding a cash value loan against a life insurance policy? Interest normally accrues on unpaid balances Loan cannot exceed the policy's cash value Policy contract terms dictate the interest rate Interest payments made by policyowner are tax-deductible

Interest payments made by policyowner are tax-deductible

Which of these statements regarding the life insurance premium for a children's term rider is correct? Decreasing premium as each child becomes an adult Level premium no matter how many children Increasing premium as additional children are born No premium is normally charged for a children's rider

Level premium no matter how many children

How is the insured protected if a payor benefit rider is attached to the life insurance policy? Premiums are waived if the payor becomes financially insolvent Policy loan will automatically cover the premiums if payor becomes disabled or dies Premiums are waived in the event the payor becomes disabled or dies Policy loan will automatically cover the premiums if payor becomes financially insolvent

Premiums are waived in the event the payor becomes disabled or dies