Quiz: Life Insurance Policy Provisions, Riders, and Options
Collateral Assignment
A business owner was trying to obtain a bank loan to fund the purchase of a new business facility, but the bank required proof of additional assets to secure the loans. The business owner decided to use her $250,000 LI policy to secure the loan. Which provision makes this possible?
Cost of Living Rider
A rider that may be attached to a LI policy that will adjust the face amount based upon specific index, such as CPI, is
DB smaller
Accelerated benefits have what size DB
Original age is used for premium determination
Advantage of reinstating a policy instead of applying for a new one?
Monthly premium waiver and monthly income
After back injury, an insured is disabled for a year. His insurance policy carries a Disability Income Benefit rider. Which of the following benefits will he receive? (Length of pre, length of income)
Refund the premiums paid
An insured died by suicide one year after the LI policy was issued. The insurer will
Paid-up additions
An insured has a LI policy from a participating company and receives quarterly dividends. He has instructed the company to apply the policy dividends to increase the DB. The dividend option that the insured has chosen is
Pay the DB
An insured purchased a life policy in 2010 and died in 2020. The insurance company discovers at that time that the insured had misstated information about her insurance history on the application. What will the insurer do?
Cash option
Annual dividend check
Grace Period
Automatic premium loan provision is activated at the end of the
Both the principal and interest will be liquidated over a selected period of time
Fixed-period settlement option
6 months
For how long is an insurance company allowed to defer policy loan requests?
6 months
How long an insu company is allowed to defer policy loan requests
Until the beneficiary's death
How long will the beneficiary receive payments under the single life settlement option?
Increasing term
Insurance for Return of Premium rider
The insured's age at death
Insured had his wife named as benef of LI. To ensure his wife had income for life after the insured's death, he chose the LI settlement option. The amount of payment will be determined by taking into account all of the following EXCEPT
Incontestability clause
LI policy clause that prevents an insurance company from denying payment of death claim after a specific period of time is known as the
Temporary storage of funds for beneficiary
Main purpose of Retained Asset Account
Interest only
Nonforfeiture option EXCEPT
Reduced paid-up
Nonforfeiture option provides coverage for the longest period of time?
Extended Term
Nonforfeiture option with the highest amount of insurance protection?
To purchase a smaller amount of the same type of insurance as the original policy
Paid-up addition option uses the dividend
Universal life
Policy allows for withdrawals or partial surrenders
Conditions for Payment Form
Required for accelerated DB
Payor Benefit
Riders would NOT cause the DB to increase
Lump Sum
Settlement option not chosen by policyowner or beneficiary, which option is used
It provides income the beneficiary cannot outlive
Single Life settlement option
Dividend amounts are guaranteed in policy
True about dividends EXCEPT
It is reduced to the amount of what the cash value would buy as a single premium
When a reduced paid-up nonforfeiture option is chosen, what happens to the face amount of the policy?
Within 2 years
When is D by suicide following the effective date, is the insurer's liability to refund the premium?
Purchase a single premium policy for a reduced face amount
When whole life policy lapses or surrendered prior to maturity, the cash value can be used to