Chapter 4 Practice Questions
Upon the submission of a death claim under a life insurance policy, when should the insurer pay the policy benefit?
Immediately after receiving written proof of loss
what required provision protects against unintentional lapse of the policy?
Grace Period
Upon the submission of a death claim under a life insurance policy, when should the insured pay the policy benefit?
Immediately after receiving written proof of loss
Items stipulated in the contract that the insurer will not provide coverage for our found in the
Exclusion clause
an insured purchased a life policy in 2010 and died in 2017. The insurance company discovers at that time that the insured her concealed information during the application process. What can they do?
Pay the death benefit
what type of beneficiary designation allows the benefit to pass from a deceased primary beneficiary to the beneficiary's heirs, instead of splitting the benefit among surviving primary beneficiaries?
Per stirpes
If a life insurance policy has an irrevocable beneficiary designation,
The beneficiary can only be changed with written permission of the beneficiary
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
and insured and his wife are both involved in a head on collision. The husband died instantly, and the wife dies 15 days later. The company pays the death benefit to the estate of the insured. This indicates that the life insurance policy had what provision?
Common Disaster
An insured purchased a life insurance policy on his life naming his wife as the primary beneficiary, and his daughter as the contingent beneficiary. Under what circumstances could the daughter collect the death benefit?
If the primary beneficiary predeceases the insured
what is the name of a clause that is included in a policy that limit or eliminates the death benefit if the insured dies as a result of war or while serving in the military?
Military service or war
which of the following statements about a suicide clause in a life insurance policy is TRUE?
Suicide is excluded for a specific period of years and covered thereafter.
which of the following is NOT typically excluded from life policies?
Death due to plane crash for a fare-paying passenger
An insured misstates her age at the time the life insurance application is taken. This misstatement may result in
adjustment in the amount of death benefit
an insured committed suicide one year after his life insurance policy was issued. The insurer will
refund the premiums paid
which of the following is TRUE about a class designation?
Beneficiaries are not identified by name
using a class designation for beneficiaries means
Naming beneficiaries as a group
which is NOT true about beneficiary designations?
The beneficiary must have insurable interest in the insured. A beneficiary is the person or interest to whom the policy proceeds will be paid upon the death of the insured. Beneficiaries do not have interest in the policy holder.
The two types of assignments are
absolute and collateral
The termination of marital property rights may be reversed for all of the following reasons EXCEPT
The spouse is named as a beneficiary has obtained or consented to a final decree or judgment of an annulment, divorce or separation
an insured had a $10,000 term life policy. The annual premium of $200 was due on February 1; however, the insured failed to pay the premium. He died on February 28. How much would the beneficiary receive from the policy?
$9,800
The owner of a life insurance policy wishes to name two beneficiaries for the policy proceeds. What will the soliciting insurance producer say?
The policyowner can specify the way proceeds are split in the policy
when a life insurance policy stipulates that the beneficiary will receive payments in specified installments or for a specified number of years, what provision prevents the beneficiary from changing or borrowing from the planned installments?
Spendthrift provision
The provision which states that both the policy and a copy of the application form the contract between the policyowner and the insurer is called the
entire contract
which of the following explains the policyowner's right to change beneficiaries, choose options, and receive proceeds of a policy?
owner's rights
which of the following methods to designate a beneficiary literally means "by the head?"
per capita
all of the following are true regarding insurance policy loans EXCEPT
Policy loans can be made on policies that do not accumulate cash value
what is the advantage of reinstating a policy instead of applying for a new one?
The original age is used for premium determination
naming a trust as the beneficiary of a life insurance policy can accomplish all of the following for the policy owner EXCEPT
Allow the trustee to transfer the assets of the trust to their personal account
what would be an advantage to naming a contingent or secondary beneficiary in a life insurance policy?
It determines who receives policy benefits if the primary beneficiary is deceased.
The clause that protects the proceeds of a life insurance policy from creditors after the death of the insured is known as the
Spendthrift clause. The spendthrift clause protects the policy proceeds from creditors of the policyowner or beneficiary.
A life insurance policy does not have a war clause. If the insured is killed during a time of war, what will the beneficiary receive from the policy?
The full death benefit
which of the following statements is TRUE concerning irrevocable beneficiaries
They can be changed only with the written consent of that beneficiary.
according to the entire contract provision, what document must be made part of the insurance policy?
copy of original application
which of the following is true about the mandatory 10-day free look in a life insurance policy?
it commences when the policy is delivered
Which of the following statements are TRUE about a policy assignment
it transfers rights of ownership from the owner to another person
an individual applied for a life insurance policy on January 10. The policy was issued on January 31; however, because the insurance agent was on vacation at that time, the policy was not delivered until February 8. After reading through the policy provisions, the insured decided to return the policy to the insurer. When would the insured need to return the policy for a refund of premium?
By February 18, or within 10 days of policy delivery
when a life insurance policy was issued, the policy owner designated a primary and a contingent beneficiary. several years later, both the insured & the primary beneficiary dies in the same car accident, and it was impossible to determine who died first. Which of the following would receive the death benefit?
the insured's contingent beneficiary
Which of the following statements about the reinstatement provision is true?
It requires the policyowner to pay all overdue premiums with interest before the policy is reinstated
and insured who had a life insurance policy for $1 million died. In filing the claim, his wife and children discovered that there was no beneficiary named on the policy. What will happen to the death benefit in this case?
It will go to insured's estate
when a policyowner designates a group of individuals as the beneficiary for a life insurance death benefit without specifically naming the individuals, this is called
Class designation
If the policyowner, the insured, and the beneficiary under a life insurance policy are three different people, who has the ownership rights?
Policyowner
An absolute assignment is a
transfer of all ownership rights in a policy
The life insurance policy clause that prevent an insurance company from denying payment of a death claim after a specified period of time is known as the
Incontestability Clause
Who has the legal title of the property in a trust?
trustee
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
the insured's estate
which of the following is true regarding the spendthrift clause in life insurance policies?
It can protect the policy proceeds from creditors of the beneficiary. The spendthrift clause in a life insurance policy prevents the beneficiary's reckless spending of benefits, and protects the policy proceeds from creditors of the beneficiary or policyowner.
An insured will be allowed to re-activate her lapsed life insurance policy if action is taken within a certain period of time, and proof of insurability is provided. Which policy provision allows this
Reinstatement
The validity of coverage under a life insurance policy may not be contested, except for nonpayment of premium, after the policy has been in force for at least how many years?
2 years
The Ownership provision entitles the policyowner to do all of the following EXCEPT
set premium rates
A policy owner who is also the insured wants to name her husband as the beneficiary of her life policy. She also wishes to retain all of the rights of ownership. The policyowner should have her husband named as the
revocable beneficiary
A business owner was trying to obtain a bank loan to fund the purchase of a new business facility, but the bank required 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 makes this possible?
collateral assignment
which of the following applies to the 10-day free-look privilege?
it permits the insured to reject the policy with a full refund
An insured has had a life insurance policy that he purchased three years ago when he was 40 years old. He is killed in an automobile accident and it is discovered that he is actually 45 years old, and not 43, as stated on the application. What will the company do?
pay a reduced death benefit
which of the following named beneficiaries would NOT be able to receive the death benefit directly from the insurer at the event of the insured's death?
A minor son of the insured
all of the following are beneficiary designations EXCEPT
specified
what is the clause that describes the method of paying the death benefit in the event that the insured and beneficiary are both killed in the same accident?
Common disaster clause
Which provision in an insurance policy extend coverage beyond the premium due date?
Grace Period
A 40 year old man buys a whole life policy and names his wife is his only beneficiary. His wife dies 10 years later. He never remarried and dies at age 61 leaving 2 grown-up children. Assuming he never change the beneficiary, the policy proceeds will go to
the insured's estate