Ch 4 Xcel pt 2

which of the following is NOT part of an insurance contract

Certificate of Authority

Life insurance policies will normally pay for losses arising from

Commercial aviation

A waiver of premium rider allows an insured to waive premium payments if the insured is

Completely and permanently disabled

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

Interest only

What is NOT considered to be a common life insurance nonforfeiture option?

Life income annuity

Common Exclusions from Coverage

Military service, aviation, hazardous occupations

Reduced Paid-Up Insurance

Nonforfeiture option where cash value is used to make a single premium payment to purchase as much of the same type of insurance as possible. Face amount of the new policy would be less than the original policy but no further premium payments would be necessary. Policy can be reinstated.

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

Pay age corrected benefits

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

Payor Benefit

What is an insurance policy's grace period?

Period of time after the premium is due but the policy remains in force. Usually 30 days.

Kurt is an active duty serviceman who was recently killed in an accident while home on leave. Which military service exclusion clause would pay upon his death? This states that the insurer is excused from the paying amount only if the death is a result of war

Results clause

Rights of Ownership

The assignment provision specifies the policy owner's right to transfer ownership of the policy.

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

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

All of these are valid policy dividend options for a life insurance policyowner EXCEPT

accumulate without interest

A rider that assures premiums will be paid on a juvenile policy until the child reaches a specific age is called a(n)

payor rider

Suicide Provision

protects insurance companies against people using suicide for a quick payment of the death benefit. If the insured commits suicide within the first two years they will not pay the death benefit and they will only return premiums that have been paid.

The two major actions required for a policyholder to comply with the Reinstatement Clause are

provide evidence of insurability, pay past due premiums

Insuring Clause

- Appears on first page of contract - has a summary of all the main points of the contract like the "promise to pay" death benefit

Which of these is considered to be a Living Benefit option in a life insurance policy?

Accelerated death benefit

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

Accelerated death benefit rider

What dividend option is taxable?

Accumulation at interest

certificate of authority

Allows an insurer to conduct business in a state

The free-look provision gives the policyowner

the right to return the policy for a full refund within a specified number of days and gives the policy owner the right to look at the policy for a specific number of days.

Purpose of grace period

to avoid unintended lapse of the policy. If the insurance dies during this period the benefit is payable, however any past due premiums will be deducted from the death benefit

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

Age

Life Settlement

An arrangement that allows the policyowner sell their existing life insurance policy to a third party for compensation.

Which situation accurately describes a reduced paid-up nonforfeiture option?

Policy has a decreased face amount

Dorian exercised a nonforfeiture option by using his life policy's cash value to purchase an extended term insurance option. When the term insurance expires,

The protection ends

Absolute Assignment

all ownership rights in the policy are transferred to a new owner. The new policyowner does not need to have an insurable interest in the insured

accelerated death benefits rider

allows insureds who are terminally ill to collect part or all of their life insurance benefits before they die

Policy Loan Provision

allows the policyholder to borrow the cash value only equal to it.

The suicide clause of a life insurance policy states that if an insured commits suicide within a stated period from the policy's inception, the insurer will only be liable for a return of premiums paid

minus indebtedness and without interest

Waiver of Premium Rider

should the owner be disabled and cant earn an income, after 6 months, all premiums will be paid by the insurer during the disability period; After 6 months, the premiums will be repaid

Incontestable Clause

the insurer cannot contest the policy after it has been in force two years during the insured's lifetime

A whole life insurance policy accumulates cash value that becomes

the policy loan value which the insured may borrow against

Double Indemnity

a benefit under which the company pays twice the face value of the policy if the insured's death results from an accident

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

A fare-paying passenger

Lapsed Policy

A policy that is no longer in force due to unpaid premiums. Also known as forfeit, surrender, cancel or terminate.

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

Accumulation at interest option

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

Reduction of premium dividend option

Under a life insurance policy, what does the insuring clause state?

The insurers obligation to pay a death benefit upon an approved death claim

Accelerated Death Benefits

an insurance policy Rider allow an insurer personal with a terminal illness to use policy benefits prior to dying

Ownership of a life insurance policy may be temporarily transferred with a(n). Once the debt or loan is repaid the rights are returned to policy owner. Usually done in order to secure a loan.

collateral assignment

a whole life policy option where extended term insurance is selected is called a

nonforfeiture option

beneficiary

one who benefits from something; a person who is left money or other property in a will or the like

Nonforfeiture Options

privileges allowed under a life insurance contract after cash values are created

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

provide evidence of insurability to the insurer