Chapter 3

the interest earned on policy dividends is

taxable

nonforfeiture values guarantee which of the following for the policyowner?

that the cash value will not be lost

upon the death of the insured, the primary beneficiary discovers that the insured chose the interest only settlement option. what does this mean?

the beneficiary will only receive payments of the interest earned on the death benefit

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

what would be an advantage of naming as contingent (or secondary) beneficiary ina life insurance policy

it dteremines who receives policy benefits if the primary beneficiary is deceased

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

the amount of premium payment

which of the following riders would NOT cause the death benefit to increase?

Payor benefit rider

a rider that jma be atached to s 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

which of the following statements is true concerning the accidental death rider?

it will pay double or triple the face amount

which of the following riders added to a life insurance policy can pay part of the death benefit to the insured to cover expenses incurred in a nursing or convalescent home?

long-term care

if a settlement option is not chosen by the oilicyowner or thebeneficiary which option will be used

lump sum

regarding the free-look provision, the insurance company

must allow the policyowner to return the policy for a full refund

if the policyowner, insured and beneficiary under a life insurance policy are three different people, who has ownership rights?

policyowner

which = life insurance settlement option guarantees payments for the lifetime of the recipient but also specifies a guaranteed period, during which, if the original recipient dies, the payments will conclude to a designated beneficiary

Life income with period certain

the accelerated benefits provision will provide for an early payment of the death benefit when the insured

becomes terminally ill

under which nonforefiture option does rhe comapny pay the surrender value and have no further obligations to the policyowner

cash surrender

when a policyowner designates a group of individuals as the beneficiary of a life insurance death benefit without specifically naming the individuals this is called

class designation

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

copy of the original application

which of the folowing is NOT typically excluded from life policies?

deathe due to plane crash for a fare paying passennnger

all of the following statemewnt convcerning dividends are true except

dividend amounts are guaranteed int he policy

items stipulated in the contract that the insurer will not provide coverage for are founf in the

exclusions clause

if a life policy allows the policyowner to make periodic additions to the face amount at standard rates, without providing insurability, the policy includes a

guaranteed insurability rider

which of the following is true of a childrens rider added to an insured's permaant life insurance policy?

it is term coverage that is convertible to permanent insurance at or prior to the child reaching the maximum coverage age

which of the following is true abouit the premium on the childrens riders in alife insurance policy

it remains the same no matter how many chikdren are added to the policy

The insured had his wife named as the beneficiary of his life insurance policy. to ensure that his wife had income for life after the insured's death, he chose the life income settlement option. the amount of payments will be determined by taking into account all of the following EXCEPT

the insured's age at death

the sole beneficiary of a life insurance policy dies before the insured. if the policyowner fails to change the beneficiary before the insured's death, the proceeds of the policy will go to

the insured's estate

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

the same face amount as in the whole life policy

the paid-up option uses the dividend

to purchase a smaller amount of thr sdame type of insurance as the origional policy

the rider in a whole life policy that allows the company to forgo collecting the premium in the insured is disabeled is called

waiver of premium