Ch 3 Life Policy Riders, Provisions, Options, and Exclusions

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 of the following information will be stated in the consideration clause of a life insurance policy?

The amount of premium payment

Which statement accurately describes group disability income insurance?

The extent of benefits is determined by the insured's income.

All if the following are TRUE statements regarding the accumulation at interest option EXCEPT

The interest is not taxable since it remains inside the insurance policy

All of the following are TRUE statements regarding the accumulation at interest option EXCEPT:

The interest is not taxable since it remains inside the insurance policy

If an insured continually uses the automatic premium loan option to pay the policy premium:

The policy will terminate when the cash value is reduced to nothing

Under an extended term nonforfeiture option, the policy cash value is converted to

The same face amount as in the whole life policy

Under an extended term nonforfeiture option, the policy cash value is converted to:

The same face amount as in the whole life policy

An insured has chosen joint and 2/3 survivor as the settlement option. What does this mean to the beneficiaries?

The surviving beneficiary will continue receiving 2/3 of the benefit paid when both beneficiaries were alive.

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

This rider is available to all insured with no additional premium

The paid-up addition option uses the dividend

To purchase a smaller amount of the same type of insurance as the original policy.

Which of the following best describes fixed-period settlement option?

Both the principal and interest will be liquidated over a selected period of time.

According to the entire contract provision, what document must be made part of the insurance policy?

Copy of the original application

Which of the following policy components contains the company's promise to pay?

Insuring Clause

Which nonforfeiture option provides coverage for the longest period of time?

Reduced Paid-Ups

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

Substitute insured rider

If a beneficiary wants a guarantee that benefits paid from principal and interest would be paid for a period of 10 years before being exhausted, what settlement option should the beneficiary select?

Fixed Period

Which is TRUE about the cash surrender nonforfeiture option?

Funds exceeding the premium paid are taxable as ordinary income.

An individual is purchasing a permanent life insurance policy with a face value of $25,000. While this is all the insurance he can afford at this time, he wants to be sure that additional coverage will be available in the future. Which of the following options should be included in the policy?

Guaranteed insurability option

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

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

All of the following are differences between individual and group health insurance EXCEPT:

Individual insurance does not require medical examinations, while group insurance does require medical examinations.

What is the benefit of choosing extended term as a nonforfeiture option?

It has the highest amount of insurance protection

When a reduced-paid up nonforfeiture option is chosen, what happens to the face amount of the policy?

It is reduced to the amount of what the cash value would buy as a single premium

Which two terms are associated directly with the premium?

Level or flexible

Which of the following settlement options in life insurance is known as straight life?

Life Income

Insured purchased a life policy in 2010 and died in 2020. The insurance company discovers at that time that she misstated information about her insurance history on the application. What will the insurer do?

Pay death benefit

Which of the following allows the insurer to relieve a minor insured from premium payments if the minor's parents have died or become disabled?

Payor Benefit

Which of the following riders would NOT cause the Death Benefit to increase?

Payor Benefit Rider

Which of the following riders would NOT cause the death benefit to increase

Payor Benefit Rider

All of the following are true regarding insurance policy loans EXCEPT:

Policy loans can be made on policies that do not accumulate cash value.

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

Purchase a single premium policy for a reduced face amount