Chapter Quiz - Life Policy Provisions, Riders, and Options

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

Assignment

All of the following are nonforfeiture options in life insurance policies Except

Automatic premium loans

Which of the following statements is true of both the fixed period and fixed amount settlement options?

Both guarantee that the principal and interest will be fully paid out.

When a death claim is submitted, the insurer discovered that the insured understated her age on the application for a life policy. What action will the insurer take?

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

The insured usually pays 1,200 annually for her life insurance premium. This year, she has accumulated $175 in dividends, and applied that to her next premium, reducing it to $1,025. What dividend option has the insured chosen?

Reduction of premium

Which of the following is not a standard exclusion in life insurance policies?

Disability

Which provision of a life insurance policy states that the application is part of the contract?

Entire contract

A spouse receives $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?

Fixed amount

If an insured commits suicide 3 years after his life insurance policy is issued, what will the insurer pay to the beneficiary?

Full death benefits

Under what circumstances will the contingent beneficiary receive the death benefit?

If the primary beneficiary dies before the insured

A life insurance policy clause that prevents an insurance company from denying payment of a death claim after a specified period of time is known as the

Incontestability clause

Which of the following is true about the free look in a life insurance policy?

It starts when the policy is delivered.

If a life insurance policy has an irrevocable beneficiary designation.

The beneficiary can only be changed with written permission of the beneficiary.

All of the following are true regarding the guaranteed insurability rider except

The insured may purchase additional coverage at the attained age.

The rider in a whole life policy that allows the company to forgo collecting the premium if the insured is disabled is called

Waiver of premium.