Ch 4b - Riders Test

Ron has a life insurance policy with a face value of $100,000 and a cost of living rider. If the consumer price index has gone up 4%, how much may Ron increase the face value of the policy? $400 $800 $2,000 $4,000

$4000

which of the following is considered to be an alternative life settlement ? 1. accelerated death benefit rider 2. waiver of premium rider 3. extended term option 4. decreasing term insurance

1. accelerated death benefit rider

the double indemnity provision in a life insurance policy pertains to an insured's death caused by

accident

a provision that allows a policyowner to temporarily give up on ownership rights to secure a loan is called a

collateral assignment

life insurance policies will normally pay for losses arising from

commercial aviation

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

completely and permanently disabled

In what part of an insurance policy are policy benefits found? 1. declarations 2. entire contract 3. waivers 4. conditions

declarations

Matt is applying for life insurance and requests a double indemnity rider. A double indemnity benefit will be payable to Matt's beneficiary if Matt

dies instantly from a car accident

A life insurance policy owner was injured in an automobile accident which results in a total and permanent disability. Which rider would pay a monthly amount because of this disability ?

disability rider

what is the name of the provision which states that at copy of the application must be attached to the policy when issued

entire contract

Which of these would limit a company's liability to provide insurance coverage ? 1. waiver 2. exclusion 3. rider 4. provision

exclusion (limiting condition)

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

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

the insurer's obligation to pay a death benefit upon an approved death claim

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

The free-look provision gives the policyowner

the right to return the policy for a full refund within a specified number of days

Joanne has a $100,000 whole life policy with an accumulated $25,000 of cash value. She would like to borrow $15,000 against the cash value. Which of the following statements is TRUE? 1. Net death benefit will be reduced if the loan is not repaid 2. No interest will be charged on loan balance 3. Term life policies are the only type of insurance that allows policy loans 4. A loan can be taken out for up to the face amount of the policy

1. Net death benefit will be reduced if the loan is not repaid

All of these are common exclusions to a life insurance policy EXCEPT 1. accidental death 2. military svc 3. aviation 4. hazardous occupations

1. accidental death

Ownership of a life insurance policy may be temporarily transferred with a(n) 1. collateral assignment 2. absolute assignment 3. transferable assignment 4. beneficiary assignment

1. collateral assignment

a life insurance policy normally contains a provision that restricts coverage in the event of death under all of the following situations EXCEPT: 1. fare-paying passenger 2. pilot of a personal plane 3. suicide 4. war

1. fare-paying passenger

Which of these is NOT considered to be a nonforfeiture option in a whole life ins policy? 1. interest only 2. reduced paid-up insurance 3. extended term insurance 4. cash surrender

1. interest only

*** which situation accurately describes a reduced paid up nonforfeiture option? 1. policy has decreased face amt 2. face amt of the new policy equals that of the original policy 3. cash value is surrendered to policyowner 4. premiums must continue to be paid

1. policy has decreased face amt

Which of the following is a reinstatment condition? 1. proof of insurability 2. changes in the insuring clause 3. premium increase 4. premium decrease

1. proof of insurability

A policyowner may exercise which of these dividend options that uses the dividend to pay all or part of the next premium due ? 1. reduction of premium dividend option 2. extended term option 3. paid up option 4. cash dividend option

1. reduction of premium dividend option

If an insured dies during the grace period with no premiums paid 1. the policy would be payable, minus the premium amount 2. the policy would be payable only after the beneficiary makes past due premium payment 3. all past premiums will be refunded with interest 4. the claim would be denied

1. the policy would be payable, minus the premium amount

All of these are valid policy dividend options for a life insurance policyowner EXCEPT 1. cash outlay to the policyowner 2. accumulate without interest 3. reduction in policy premium 4. buy additional insurance coverage

2. accumulate without interest

In order to activate the reinstatement clause of a lapsed life insurance policy, the insured MUST 1. remit all past-due premiums within the grace period 2. provide evidence of insurability to the insurer 3. resubmit a new life insurance application 4. provide a valid reason for the lapse

2. provide evidence of insurability to the insurer

The two major actions required for a policyholder to comply with the Reinstatement Clause are 1. provide evidence of insurability, agree to a new incontestable period 2. provide evidence of insurability, pay past due premiums 3. pay past due premiums, agree to a new incontestable period 4. pay past due premiums, agree to a reduction in coverage

2. provide evidence of insurability, pay past due premiums

Pat owns a 20-pay life policy with a paid-up dividend option. Which of the following statements is true? 1. the policy may be paid up early by using accumulated cash values 2. the policy may be paid up early by using policy dividends 3. the policy's premiums will increase after 20 years 4. the policy's cash values steadily decrease after 20 years

2. the policy may be paid up early by using policy dividends

all of the following riders can increase the death benefit amount EXCEPT 1. cost of living 2. waiver of premium 3. accidental death rider 4. guaranteed insurability

2. waiver of premium

Loans obtained by a policy-owner against the cash value of a life insurance policy 1. are treated as taxable income 2. would not be treated as taxable income 3. are limited by the face amount of the policy 4. would be subject to a Federal estate tax

2. would not be treated as taxable income

James is the insured on a life insurance policy where his age was misstated on the application. Which of the following is CORRECT regarding the death benefit amount? 1. The original face amount will be paid to the beneficiary 2. The policy will be voided with no death benefits paid 3. The death benefit paid will be what the premium would have purchased at the correct age 4. The amount of premiums paid will be returned with interest

3. The death benefit paid will be what the premium would have purchased at the correct age

Which of these is considered to be a living benefit option in a life insurance policy ? 1. reinstatement 2. waiver of premium 3. accelerated death benefit 4. payor benefit

3. accelerated death benefit

which of the following protects a policy owner from a misrepresentation cause by an innocent mistake ? 1. reinstatement clause 2. entire contract clause 3. incontestable clause 4 nonforfeiture clause

3. incontestable clause

A whole life policy option where extended term insurance is selected is called an 1. dividend option 2. settlement option 3. nonforfeiture option 4. interest-only option

3. nonforfeiture option

ALL of the following are considered to be nonforfeiture options available to a policy owner EXCEPT 1. extended term insurance 2. cash surrender 3. reduction of premium 4. reduced paid-up insurance

3. reduction of premium

Of the following dividend options, which of these is taxable? 1.Reduction of premium 2.One year term 3. Paid-up additions 4. Accumulation at interest

4. Accumulation at interest

An insurer will accept a premium from the insured and continue the coverage in full force as though it was NOT late during which time period? 1.Incontestable period 2.Probation period 3.Reinstatement period 4. Grace period

4. Grace period

Which of the following is NOT a part of an insurance contract? 1. policy 2. application 3. riders 4. certificate of authority

4. certificate of authority

which of these is NOT considered to be a common life insurance nonforfeiture option? 1. cash surrender 2. extended term insurance 3. reduced paid up insurance 4. life income annuity

4. life income annuity

A guaranteed issue insurance policy has no 1. initial premium requirement 2. incontestable period 3. waiting period 4. medical underwriting

4. medical underwriting

Which of these is NOT a characteristic of the Accelerated death benefit option? 1. the face amt and policy premium are NOT affected by the payment 2. before payment of the benefit is made, specific conditions must exist, such as suffering from a terminal illness 3. there may be a dollar limit on the maximum benefit 4. the benefit can be offered as a rider at a specific extra cost or may be at no cost

4. the benefit can be offered as a rider at a specific extra cost or may be at no cost

What is an insurance policy's grace period

Period of time after the premium is due but the policy remains in force

An endorsement found in an insurance plan which modifies the provision of the policy is called

Rider

A whole life insurance policy accumulates cash value that becomes

a policy loan value which the insured may borrow against

If an insured's age on a life insurance policy has been misstated, what is the insurer's liability if the insured dies?

a prorated death benefit based on the amount of the insurance the insured's premiums would have been if purchased at the correct age.

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

accumulation at interest option

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? 1. Marital status 2. Age 3. Address 4. Income

age

A life insurance rider that allows an individual to purchase insurance as they grow older, regardless of insurability, is called a

guaranteed insurability rider

Barbara's policy includes a rider which allows her to purchase additional insurance at specific dates or events without evidence of insurability. This rider is called a(n)

guaranteed insurability rider

What is the purpose for having an accelerated death benefit on a life ins policy ?

it allows for cash advances to be paid against the death benefit if the insured becomes terminally ill

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 insured will only be liable for a return of premium paid:

minus indebtedness and without interest

a provision in a whole life policy that allows a policy owner to terminate a policy in return for a reduced-paid up policy of the same type is called a

nonforfeiture provision

a provision that allows a policyowner to withdraw a policy's cash value interest free is an

partial surrender

the automatic premium loan provision authorized an insurer to withdraw from a policy's cash value the amount of

past due premiums that have not been paid by the end of the grace period

what is an 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

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

payor rider

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?

results ( the results clause states the insurer is excused from paying the amt only if the death is a result of war)

a life insurance policyowner does NOT have the right to

revoke an absolute assignment