Chapter 2 insurance
all of the following are examples of third party ownership of a life insurance policy EXCEPT
An insured borrows money from the bank and makes collateral assignment of a part of the death benefit to secure the loan
If a settlement option is not chosen by the policy owner or the beneficiary, what option will be used by the insurer?
Lump sum
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 EXCEPT
Policy loans can be made on policies that do not accumulate cash value
Which is true about a spouse term rider?
The rider is usually level term insurance
What is the purpose of a suicide provision within a life insurance policy?
To protect the insurer from persons who purchase life insurance with the intention of committing suicide
the accelerated benefits provision for an earl payment of the death benefit when the insured
becomes terminally ill
A rider that may be attached to a life insurance policy that will adjust the face amount based upon a specific index, such as the consumer price index is called
cost of living rider
what happens when a policy is surrendered for its cash value
coverage ends and the policy cannot be reinstated
when the insured selects the extended term nonforfeiture option, the cash value will be used to purchase term insurance with what face amount?
equal to the original policy as long as the cash values will purchase.
Life income joint and survivor settlement option guarantees
income for 2 or more recipients until they die
During partial withdrawal from a universal life policy, which portion will be taxed?
interest
The policy owner wants to make sure that upon his death, the life policy will pay a portion of the proceeds annually to his spouse, but that the principal will be paid to their children when they reach a certain age. which settlement option should they choose?
interest only option
which of the following statements is TRUE concerning the Accidental Death Rider
it will pay double or triple the face amount
The type of settlement option which pays throughout the lifetimes of two or more beneficiaries is called
joint and survivor
the dividends option in which the policyowner used dividends to purchase a term policy for one year is referred to as
one-year term option
Which of the following explains the policyowners right to change beneficiaries, choose options, and receive proceeds of a policy?
owner's rights
An insured purchased a life policy in 2010 and died in 2017. The insurance company discovers at that time that the insured had concealed information during the application process. What can they do?
pay the death benefit. they waited past 2 years.
The policyowner pays her life insurance annually. until now she has collected a nontaxable dividends check each year. she has decided that she would rather use the dividends to help pay for her next premium. what option would allow her to do this?
reduction of premium
the interest earned on policy dividends is
taxable
Nonforfeiture Values guarantee which of the following for the policyowner
the cash value will not be lost
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
An insured stops making payments on a loan taken from his cash value policy. What will most likely happen?
the policy will terminate when the loan amount with interest equals or exceeds cash value
what is the purpose of a fixed-period settlement option
to provide a guaranteed income for a certain amount of time
how long will the beneficiary receive payments under the single life settlement option
until death of beneficiary
the rider in a whole life policy that allows the company to forgo collecting the premium is the insured is disabled is called
waiver of premium