Chapter 3 Exam 2 - Life Provisions

What benefit does the Payor clause on a Juvenile Life policy provide?

Premiums are waived if payor becomes disabled

Which of these types of life insurance allows the policyowner to have level premiums and to also choose from a selection of investment options?

Variable Life

Additional coverage can be added to a Whole Life policy by adding a(n)

decreasing term rider

The Accidental Death and Dismemberment (AD&D) provision in a life insurance policy would pay additional benefits if the insured

is blinded in an accident

S buys a $50,000 whole life policy with a $50,000 Accidental Death and Dismemberment rider. S dies 1 year later of natural causes. How much will the insurer pay the beneficiary?

$50,000

A potential client, age 40, would like to purchase a Whole Life policy that will accumulate cash value at a faster rate in the early years of the policy. Which of these statements made by the producer would be correct?

20-Pay Life accumulates cash value faster than Straight Life

Which of these actions is taken when a policy owner uses a Life Insurance policy as collateral for a bank loan?

Collateral assignment

A long-term care rider in a life insurance policy may trigger a benefit in the event of which of the following?

Inability of the insured to perform more than 2 Activities of Daily Living (ADL's)

How are policyowner dividends treated in regards to income tax?

Interest on accumulations is taxed

Which of these Nonforfeiture Options continue a build-up of cash value?

Reduced Paid-Up

The provision that can be used to put an insurance policy back in force after it has lapsed due to nonpayment is called

Reinstatement

When a misrepresentation on a life insurance policy application is discovered, what action may an insurance company take?

Void the policy only if it is discovered during the Contestable period and proven to be material

A life insurance policy which ensures that the premium will be paid if the insured becomes disabled has what kind of rider attached?

Waiver of Premium

When is the face amount of a Whole Life policy paid?

When the insured dies or at the policy's maturity date, whichever happens first

In a life insurance policy, which provision states who may select policy options, designate and name a beneficiary, and be the recipient of any financial benefits from the policy?

Owner's Rights

The automatic premium loan provision is designed to

avoid a policy lapse

S would like to use dividends from her life insurance policy to purchase paid-up additions. All of these would be factors that determine how much coverage can be purchased EXCEPT

beneficiary's age

What is the Suicide provision designed to do?

safeguard the insurer from an applicant who is contemplating suicide

Which statement regarding the Misstatement of Age provision is considered to be true?

Coverage will be adjusted to reflect the insured's true age if a misstatement of age is discovered

What action will an insurer take if an interest payment on a policy loan is not made on time?

automatically add the amount of interest due to the loan balance