Policies Provisions
P purchases a $50,000 term life insurance policy in 2005. One of the questions on the application asks if P engages in scuba diving, to which P answers "No". The policy is then issued with no scuba exclusions. In 2010, P takes up scuba diving and dies in a scuba-related accident in 2011. What will the insurer pay to P's beneficiary?
$50,000 minus any outstanding policy loans
Which statement regarding the Misstatement of Age provision is considered to be true?
Coverage will be adjusted is the misstatement of age is to be discovered
How are surrender charges deducted in a life policy with a rear-end loaded provision?
Deducted when the policy is discontinued
All of these statements about the Waiver of Premium provision are correct EXCEPT
Insured must be eligible for Social Security disability for claim to be accepted
All of these statements about the Waiver of Premium provision are correct EXCEPT:
Insured must be eligible for Social Security disability for claim to be accepted
Which of these is NOT considered to be a right given to a policyowner?
Modify a provision in the insurance contract
What benefit does the Payor clause on a Juvenile Life policy provide?
Premiums are waived if payor becomes disabled
Which of the following is an example of a nonforfiture option?
Reduced Paid-up option
Which type of life policy contains a monthly mortality charge as well as self-directed investment choices?
Variable Universal Life
A life insurance policy which ensures that the premium will be paid if the insured becomes disabled has what kind of rider attached?
Waiver of Premium
Automatic Premium Loan Provision is designed to
avoid a policy lapse
The Automatic Premium Loan provision is designed to:
avoid a policy lapse
S would like to use dividends from her life insurance policy to purchase paid-up additions. All of these would be factors that determine how much coverage can be purchased EXCEPT
beneficiary's age
A potential client, age 40, would like to purchase a Whole Life policy that will accumulate cash value at a faster rate in early years of policy. Which of these statements made by the producer would be correct?
20-Pay Life accumulates cash value faster than Straight Life
The option that provides an additional death benefit for a limited amount of time at the lowest possible cost is called a(n):
Accidental Death and Dismemberment (AD&D) rider
P is blinded in an industrial accident. Which provision of his life insurance policy will pay a stated benefit amount?
Accidental Death and Dismemberment clause
Which rider provides coverage for a child under a parent's life insurance policy?
Child term rider
N is covered by a Term Life policy and does not make the required premium payment which was due August 1. N dies September 15. What action will the insurer take?
Claim will be denied
How do life insurance companies handle cases where the insured commits suicide within the contract's stated Contestable period?
Claims are denied under the Suicide clause of the policy
What provision in a life insurance policy states that the application is considered part of the contract?
Entire Contract provision
D owns a Whole Life policy that was purchased 10 years ago. If the premium payments suddenly stop and D takes no additional action, which Nonforfeiture Option will the insurer likely proceed with?
Extended Term
How are policyowner dividends treated in regard to income tax?
Interest on accumulations is taxed
What statement about Settlement Options is NOT true?
Only the beneficiary may select
P is the insured on a participating life policy. Which statement is true if P's premiums are waived due to a disability?
P will still receive declared dividends
K owns a Whole Life policy. If K wants an increasing Death Benefit to protect against inflation, which Dividend Option should she choose?
Paid-Up Additional Insurance
Which of the following provisions guarantees that premiums will be waived if a Juvenile Life policyowner becomes disabled?
Payor clause
D was actively serving in the Marines when he was killed in an automobile accident while on leave. His $100,000 Whole life policy contains a War Exclusion clause. How much will D's beneficiary receive?
The full face amount
What does the ownership clause in a life insurance policy state?
Who the policyowner is and what rights the policyowner is entitled to
A Return of Premium life policy is:
Whole life and Increasing term
A Cost of Living rider gives the insured
additional death benefits
The incontestable clause allows an insurer to:
contest a claim during the Contestable Period
A Nonfortitude clause gives the policyowner
guaranteed values even if the policy has lapsed
The Accidental Death and Dismemberment (AD&D) provision in life insurance policy would pay additional benefits if the insured:
is blinded in an accident
The ________ has the right to change a life insurance policy's beneficiary.
policyowner
Typically a life insurance death benefit is paid by a lump-sum payment. A(n) __________ option is a method of distributing a Life Insurance policy's death benefit OTHER than by a lump sum payment.
settlement
The advantage of reinstating an original life policy is
the premiums are based on a younger age
What is NOT an example of a Nonforfiture option?
Life Income
A Term Life rider offers the insured
additional life coverage
