Chapter 3: life
the ownership provision entitles the policy owner to do all of the following EXCEPT: A: designate a beneficiary B: set premium rates C: receive a policy loan D: assign the policy
B: set premium rates
what is a consideration: A: transfer of rights of the policy ownership B: something of vale that each party gives to the other (blinding in force in any contract) C: a principle of reimbursement on which insurance is based; in the events of loss, an insurer reimburses the insureds or beneficiaries for the loss D: payment of the entire benefit in one sum
B: something of vale that each party gives to the other (blinding in force in any contract)
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 the life income statement option. the amount of payments will be determined by taking into accounts all of the following EXCEPT: A: face amount of the policy B: the insured's age at death C: the beneficiary's life expectancy D: projected interest rates
B: the insured's age at death
which of the following allows the insurer to relieve a minor insured from premium payments if the minor's parents have died or become disabled: A: waiver of premium B: payor benefit C: jumping juvenile D: juvenile premium provision
B: payor benefit
after a back injury, an insured is disabled for a year. his insurance policy carries a disability income benefit rider. which of the following benefits will her receive: A: monthly premium waiver and monthly income B: percentage of medical costs paid by the insurer C: payments for life D: yearly premium waiver and income
A: monthly premium waiver and monthly income
what is a minor: A: person under legal age B: national association of insurance commissioners, an organization composed of insurance commissioners from all states and jurisdictions formed to resole insurance regulatory issues. C: the face value of the policy; the original amount invested before earnings D: transfer of rights of policy ownership
A: person under legal age
who can request changes in premium payments, face value, loans, and policy plans: A: producer B: policy owner C: contingent beneficiary D: beneficiary
B: policy owner
according to the entire contract provision, a policy must contain: A: a copy of the original application for insurance B: a declarations page with a summary of insureds C: buyers guide to life insurance D: listing of the insured's former insurer for the incontestability
A: a copy of the original application for insurance
which of the following named beneficiaries would NOT be able to receive the death benefit directly from the insurer in the event of the insured's death: A: a minor son of the insured B: a business partner of the insured C: the wife of the deceased insured D: the former wife of the deceased insured
A: a minor son of the insured (minors does not have legal capacity)
which of the following premium payment modes will incur the lowest overall payment: A: annual B: semi- annual C: quarterly D: monthly
A: annual
which of the following best describes fixed- period settlement option: A: both the principle and interest will be liquidated over a selected period of time B: only the principle amount will be paid out within a specified period of time C: the death benefit must be paid in a lump sum within a certain time period D: income is guaranteed for the life beneficary
A: both the principle and interest will be liquidated over a selected period of time
which of the following is NOT typically excluded life policies: A: death due to plane crash for a fare-paying passenger B: self-inflicted death C: death that occurs while a person is committing a felony D: death due to war or military service
A: death due to plane crash for a fare-paying passenger
all the following statements concerning dividends are true EXCEPT: A: dividend amounts are guaranteed in the policy B: lower insurance company costs generate higher dividends C: they stem from favorable underwriting experience D: favorable investment results generate higher dividends
A: dividend amounts are guaranteed in the policy
which nonforfeiture option has the highest amount of insurance protection: A: extended term B: conversion C: decreasing term D: reduced paid-up
A: extended term
if a beneficiary wants a guarantee that benefits paid from principle and interest would be paid for a period of 10 years before being exhausted, what settlement option should the beneficiary select: A: fixed period B: life with period certain C: fixed amount D: interest only
A: fixed period
which provision of life insurance policy states the insurer's duty to pay benefits upon the death of the insured, and to whom the benefits will be paid: A: insuring clause B: entire contract clause C: beneficiary clause D: consideration clause
A: insuring clause
when a reduced-paid um nonforfeiture option is chosen, what happens to the face amount of the policy: A: it is reduced to the amount of what cash value would buy as a single premium B: it is increased when extra premiums are paid C: it decreases over the term of the policy D: it remains the same as the original policy, regardless of any differences in value
A: it is reduced to the amount of what cash value would buy as a single premium
which of the following statements about the reinstatement proviso is true: A: it requires the policy owner to pay all overdue premiums with interest before the policy is reinstated B: it permits reinstatement within 1- years after a policy has lapsed C:it provides for reinstatement of a policy regardless of the insured's health D: it guarantees the reinstatement of a policy that has been surrendered for cash
A: it requires the policy owner to pay all overdue premiums with interest before the policy is reinstated
a policy owner who is also the insured wants to name her husband as the beneficiary of her life policy. she also wished to retain all of the rights of ownership. the policy owner should have her husband named as: A: revocable beneficiary B: secondary beneficiary C: contingent beneficiary D: irrevocable beneficiary
A: revocable beneficiary
the sole beneficiary of a life insurance policy dies before the insured. if the policy owner fails to change the beneficiary before the insured's death, the proceeds of the policy will go to: A: the beneficiary's estate B: the insured's estate C: probate D: the state
A: the beneficiary's estate
which is true about a spouse term rider: A: the rider is usually level term insurance B: coverage is allowed for an unlimited time C: the rider is decreasing term insurance D: coverage is allowed up to age 75
A: the rider is usually level term insurance
an absolute assignment is a: A: transfer of all ownership rights in a policy B: transfer of some ownership rights in a policy C: change of beneficiary D: change of insurer
A: transfer of all ownership rights in a policy
what is an assignment: A: transfer of rights of the policy ownership B: something of vale that each party gives to the other (blinding in force in any contract) C: a principle of reimbursement on which insurance is based; in the events of loss, an insurer reimburses the insureds or beneficiaries for the loss D: payment of the entire benefit in one sum
A: transfer of rights of the policy ownership
the rider in a whole life policy that allows the company to forgo collecting the premium if the insured is disabled is called: A: waiver of premium B: guaranteed insurability C: waiver of cost insurance D: payor benefit
A: waiver of premium
which of the following named beneficiaries would NOT be able to receive the death benefit directly from the insurer in the event of the insured's death: A: the former wife of the deceased insured B: a minor son of the insured C: a business partner of the insured D: the wife of the deceased insure
B: a minor son of the insured
what is an indemnity: A: transfer of rights of the policy ownership B: a principle of reimbursement on which insurance is based; in the events of loss, an insurer reimburses the insureds or beneficiaries for the loss C: something of vale that each party gives to the other (blinding in force in any contract) D: payment of the entire benefit in one sum
B: a principle of reimbursement on which insurance is based; in the events of loss, an insurer reimburses the insureds or beneficiaries for the loss
a business owner was trying to obtain a bank loan to fund the purchase of a new business facility, but the bank requires proof of additional assets to secure the loan. the business owner then decided to use her $250,000 life insurance policy to secure the loan. which provision make this possible: A: ownership provision B: collateral assignment C: insurable interest D: modification clause
B: collateral assignment
according to the entire contact provision, what document must be made part of the insurance policy: A: outline of coverage B: copy of the original application C: buyer's guide D: agent report
B: copy of the original application
if a life policy allows the policy owner to make periodic additions to the face amount at standard rates, without proving insurability, the policy includes a: A: nonforfeiture option B: guaranteed insurability rider C: paid- up additions option D: cost of living provision
B: guaranteed insurability rider
what is the NAIC: A: person under legal age B: national association of insurance commissioners, an organization composed of insurance commissioners from all states and jurisdictions formed to resole insurance regulatory issues. C: the face value of the policy; the original amount invested before earnings D: transfer of rights of policy ownership
B: national association of insurance commissioners, an organization composed of insurance commissioners from all states and jurisdictions formed to resole insurance regulatory issues.
the dividend option in which the policy owner dividends to purchase a term policy for one year is referred to as : A: paid up additions B: one year term options C: paid up options D: accelerated endowment
B: one year term options
an insured pays an annual premium to his insurer. in return, the insurer promises to pay benefits in accordance with the terms of the contract. this is called: A: utmost good faith B: acceptance C: consideration D: conditions
C: consideration
which of the following applies to the 10-day free look privilege: A: it can be waived only by the insurance company B: it is granted only at the option of the agent C: it permits the insured to return the policy for a full refund of premiums paid D: it allows the insured 10 days to pay the initial premium
C: it permits the insured to return the policy for a full refund of premiums paid
if a settlement option is not chosen by the policy owner or the beneficiary, which option will be used: A: fixed period B: fixed amount C: lump sum D: life income
C: lump sum
an insured purchased a life policy in 2010 and died in 2017. the insurance company discovers at the time that the insured had misstated information during the application process. what can they do: A: pay a decreased death benefit B: sue for the right to not pay the death benefit C: pay the death benefit D: refuse to pay the death benefit because of the misstatement on the application
C: pay the death benefit
all of the following are true regarding insurance policy loans EXCEPT: A the policy will terminate if the loan plus interest equals or exceeds the cash value of the policy B: policy owners can borrow up to the full amount of their whole life policy's cash value C: policy loans can be made on policies that do not accumulate cash value D: the amount of the outstanding loan and interest will be deducted from the policy proceeds when the insured
C: policy loans can be made on policies that do not accumulate cash value
if the policy owner, the insured, and the beneficiary under a life insurance policy are three different people, who has the ownership rights: A: beneficiary B: insured C: policy owner D: the insured and the policy owner
C: policy owner
children riders attached to whole life policies are usually issued as what type of insurance: A: adjustable life B: whole life C: term D: variable life
C: term
whIch of the following is TRUE about nonforfeiture values: A: a table showing nonforfeiture values for the next 10 years must be included in the policy B: policy owners do not have the authority to decide how to exercise nonforfeiture values C: they are required by state law to be included in the policy D: they are optional provisions
C: they are required by state law to be included in the policy
what is the waiting period on a waiver of premium rider life insurance policies: A: 30 days B: 3 months C: 5 months D: 6 months
D: 6 months
which is TRUE about the cash surrender nonforfeiture otion: A: after the cash surrender, the insured is covered for a grace period of 1 month B: the policy remains active for some time after the policyholder opts for cash surrender C: the policyholder receives the original cash value of the policy D: funds exceeding the premium paid are taxable as ordinary income.
D: funds exceeding the premium paid are taxable as ordinary income
which of the following is TRUE about the 10-day free-look-period in a life insurance policy: A: it begins when the application is signed B: it applies only to the term life insurance policies C: it is optional on all life insurance policies D: it begins when the policy is delivered
D: it begins when the policy is delivered
which of the following is true of a children's rider added to an insured's permanent life insurance policy: A: it is permanent insurance B: the policy covers only the natural child of the insured C: each child covered must show evidence of insurability D: it is term coverage that is convertible to permanent insurance at or prior to the child reaching the maximum coverage age
D: 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 explains the policy owners right to change beneficiaries, choose options and receive of a policy A: the entire contract provision B: the consideration clause C: assignment rights D: owners rights
D: owners rights
what is a lump sum: A: transfer of rights of the policy ownership B: a principle of reimbursement on which insurance is based; in the events of loss, an insurer reimburses the insureds or beneficiaries for the loss C: something of vale that each party gives to the other (blinding in force in any contract) D: payment of the entire benefit in one sum
D: payment of the entire benefit in one sum
which is NOT true about beneficiary designations: A: the beneficiary may be a natural person B: the policy does not have to have a beneficiary named in order to be valid C: trust can be valid beneficiaries D: the beneficiary must have insurable interest in the insured
D: the beneficiary must have insurable interest in the insured
what is a principle: A: person under legal age B: national association of insurance commissioners, an organization composed of insurance commissioners from all states and jurisdictions formed to resole insurance regulatory issues. C: transfer of rights of policy ownership D: the face value of the policy; the original amount invested before earnings
D: the face value of the policy; the original amount invested before earnings
