Chapter 4 Exam - Life Policy Provisions and Options

Ted owns a $50,000 Whole Life Policy. At age 47, he decides to stop paying his premiums on his policy when it has $15,000 of cash value and exercise the Extended Term Option. Ted's benefit will be:

$50,000

Individual life policies typically pay out a death benefit if death is a result of suicide after they have been in force for _______ years.

2

Generally, an insurer may defer the granting of a policy of a loan for up to _____ months.

6

Which provision allows an insurer to borrow from the cash value of a policy in order to pay premiums due and prevent a lapse in coverage?

Automatic Premium Loan

Mona let her permanent policy lapse. She discovered that there was $2,498 in cash value remaining in the policy and decided to payoff some of her credit card debt. She exercised which Nonforfeiture Option?

Cash Surrender

Jamie has a $200,000 permanent policy and cannot continue making the premium payments. She still, however, wants the peace of mind of being covered for the same $200,000 in death benefit though it may be for an abbreviated period of time. The Nonforfeiture Option Jamie should choose is:

Extended Term

All of the following are situations in which a life insurance company can legally get out of paying a death claim after the insured has died, except:

Five years after the policy was issued, the insurer discovered that the insured was actually older that was stated on the application

Cranston wants a settlement Option for his beneficiary that will guarantee the beneficiary an income as long as the beneficiary lives. Cranston should choose:

Life Income Only

Burt named Liz as his beneficiary; however, he did not choose a Settlement option to be used to receive the benefits?

Liz the beneficiary determines which option she would like to have

The insuring clause is found:

On the first page of the policy

Beth owns a 20-Pay Life participating policy. She has decided that the dividends should be applied toward future premiums. Which Dividend Option did she choose?

Premium Reduction

Which of the following is responsible for paying the premiums due on a life insurance policy?

The Policyowner

Which of the following statements about policy dividends is TRUE?

There are several dividend options to choose from

Which statement is FALSE regarding Nonforfeiture Options?

They are used when the insured lives to the endowment date of the policy or at the insured's death

All of the following are TRUE about the Automatic Premium Loan (APL) Provision, except:

it is available on any type of life insurance policy