Chapter 5: Policy Provision, Riders, & Options Quiz

A. Automatic Premium Loans

7. All of the following are nonforfeiture options in life insurance policies EXCEPT: A. Automatic Premium Loans B. Case Surrender Value C. Extended Term D. Reduced Paid-Up Insurance

D. Assignment

3. Which of the following terms refers to the transfer of some or all of the ownership rights of a life insurance policy from one individual to another? A. Nonforfeiture B. Endorsement C. Transfer of value D. Assignment

C. If the primary beneficiary dies before the insured

1. Under what circumstances will the contingent beneficiary receive the death benefit? A. If designated by the primary beneficiary B. If contingent beneficiary is the insured's estate C. If the primary beneficiary dies before the insured D. If designated by the insurer

D. Disability

9. Which of the following is NOT a standard exclusion in life insurance policies? A. Aviation B. Military service C. Hazardous occupation D. Disability

A. Pay next year's premium in advance

8. In order to reinstate a life insurance policy the insured must do all of the following EXCEPT: A. Pay next year's premium in advance B. Pay back premiums C. Pay any interest due on back premiums D. Repay any outstanding loans and interest

C. Waiver of premium rider

10. Because of an injury, an insured has been unable to work for 7 months. He wasn't able to pay his life insurance policy premium, yet the policy remains in force. The policy includes: A. Accelerated benefits rider B. Nonforfeiture options C. Waiver of premium rider D. Guaranteed insurability benefits

B. Fixed amount

5. A spouse received a $5,000 a month until the principal and interest on her husband's life insurance policy have been paid out. Which settlement option did this beneficiary choose? A. Life income B. Fixed amount C. Case payment D. Fixed period

D. It begins when the policy is delivered

4. Which of the following is true about the mandatory free-look period in a life insurance policy? A. It begins when the application is signed B. It applies only to term life insurance policies C. It can be waived by an insurer D. It begins when the policy is delivered

C. Reduction of premium

6. The insured pays $1,200 annually for her life insurance premium. This year, she has accumulated $175 worth of dividends, which she applies to her next premium, thus reducing it to $1,025. What dividend option has the insured chosen? A. Cash option B. Reduced paid-up C. Reduction of premium D. Accumulation at interest

C. Pay a reduced death benefit based on the insured's actual age

2. When a death claim is submitted, the insurer discovered the the insured understated her age on the application for a life policy. What action will the insurer take? A. Deny the claim based on material misrepresentation on the application B. Pay the face amount of the policy if the death officered after the incontestable period C. Pay a reduced death benefit based on the insured's actual age D. Pay the stated death benefit less the unpaid premium owed to the company as a result of the understated age