life insurance ch. 3&4
Elizabeth is the beneficiary of a life insurance policy. She is receiving the death benefit in payments of $10,000 per month until the principal and interest has been paid out. Which option was chosen?
Fixed amount
Which of these us not a characteristic of the accelerated death benefit option?
the benefit can be offered as a rider at a specific extra cost or may be at no cost
If the beneficiary dies from the same accident as the insured individual, the insurer will proceed as if
the insured outlived the beneficiary
Pat owns a 20-pay life policy with a paid-up dividend option. Which of the following statements is true?
the policy may be paid up early by using policy dividends
Dorian exercised a nonforfeiture option by using his life policy's cash value to purchase an extended term insurance option. When the term insurance expires,
the protection ends
The free-look provision gives the policy owner
the right to return the policy for a full refund within a specified number of days
A life insurance policy that contains a guaranteed interest rate with the chance to earn a rate that is higher than the guaranteed rate is called
universal life
A life insurance policy that is subject to a contract interest rate is referred to as
universal life
A partial surrender is allowed in which of the following life policies?
universal life
Joe has a life insurance policy that has a face amount of $300,000. After a number of years, the policy's cash value accumulates to $50,000 and the face amount becomes $350,000. What kind of policy is this?
universal life policy
Shawn, Mike, and Dave are brothers who have a $100,000 "first to die" joint life policy covering all three of their lives. If Mike dies first, the policy proceeds
will no longer provide insurance protection
A renewable term life insurance policy allows the policyowner the right to renew the policy
without producing proof of insurability
A spouse and child can be added to the primary insured's coverage as what kind of rider?
Family term
Which of these riders will pay a death benefit if the insured's spouse dies?
Family term insurance rider
What is the primary feature of a viatical settlement?
reduced death benefit prepayment
what is the automatic continuance of insurance coverage referred to as?
renewal
Term insurance is appropriate for someone who
seeks temporary protection and lower premiums
Which type of multiple protection policy pays on the death of the last person?
survivorship life policy
What types of life insurance are normally used for key employee indemnification?
term,whole,and universal life insurance
Pre-death distributions from a modified endowment contract (MEC) receive different tax treatment than other life insurance policies because
the MEC tends to be an investment vehicle
what is the name of the provision which states that a copy of the application must be attached to the policy when issued?
Entire Contract
An example of naming a beneficiary by class would be
"to the children born of my union with Ned Jackson
which of these premium payment frequencies is not typically available to a policyowner?
Bi-weekly
Jonas is a whole life insurance policyowner and would like to add coverage for his two children. Which of the following products would allow him to accomplish this?
Child term rider
Naming a contingent beneficiary as "all surviving children" is described by which term?
Class designation
Pat is insured with a life insurance policy and Karen is his primary beneficiary. They are both involved in an automobile accident where Pat dies instantly and Karen dies 5 days later. Which policy provision will protect the rights of the contingent beneficiary to receive the policy benefits?
Common disaster clause
How is the cost of a policy affected when a policyowner pays premiums more frequently?
Increases
What happens to the total amount of premium paid for an insurance policy when the payment frequency increases?
Increases
What is the purpose for having an accelerated death benefit on a life insurance policy?
It allows for cash advances to b e paid against the death benefit if the insured becomes terminally ill
Insurance premium is determined by each of the following factors EXCEPT
Liquidity
A beneficiary has just received a claim payment for a life insurance policy. Which of the following is TRUE regarding the federal income tax liability owed?
No federal income tax is owed on life insurance proceeds
An interest-sensitive life insurance policyowner may be able to withdraw the policy's cash value interest free. The provision that allows this is called
Partial surrender
Which type of rider will waive the premium on a child's life insurance policy if the parent paying the premium dies?
Payor benefit
Under a Modified Endowment Contract, what are the likely tax consequences?
Pre-death distributions will become taxable
Kurt is an active duty serviceman who was recently killed in an accident while home on leave. Which military service exclusion clause would pay upon his death?
Results
What is a corridor in relation to a Universal Life insurance policy?
The gap between the total death benefit and the policy's cash value
Reggie purchased a life insurance policy with a face amount of $500,000. After 15 years, the cash value has accumulated to $100,000 and the policy's face amount has become $600,000. Which type of life insurance policy is this?
Universal Life
Which type of policy combines the flexibility of a universal life policy with investment choices?
Variable universal life policy
a policy owner can receive a percentage payment of the death benefits prior to death by using what kind of contract?
Viatical settlement agreement
Which of these would be the best example of a limited pay life insurance policy?
Whole life policy with premiums paid up after 20 years
a single premium cash value policy can be described as
a policy that is paid up after only one payment
which of these is considered to be a living benefit option in a life insurance policy?
accelerated death benefit
The double indemnity provision in a life insurance policy pertains to an insured's death caused by a(n)
accident
Ownership of a life insurance policy may be temporarily transferred with a(n)
collateral assignment
Life insurance policies will normally pay for losses arising from
commercial aviation
Where would policy proceeds be paid if both the insured and primary beneficiary were killed in the same accident?
contingent beneficiary
Which of these is affected by frequency of an insurance policy's premium payment?
cost
The least expensive option to pay off a 30 year mortgage balance would be
decreasing term life
A life insurance policyowner was injured in an automobile accident which results in a total and permanent disability. Which rider would pay a monthly amount because of this disability?
disability income rider
Which type of life insurance policy pays the face amount at the end of the specified period if the insured is still alive?
endowment policy
which of these would limit a company's liability to provide insurance coverage?
exclusion
An insurer will accept a premium from the insured and continue the coverage in full force as though it was NOT late during which time period?
grace period
A business will typically use which type of life insurance to cover their employees?
group policy
Level premium term life insurance policies
have premiums that are averaged over the policy period
Which settlement option involves having the proceeds remain with the insurer and earnings paid on a monthly basis to the beneficiary?
interest only
which settlement option involves having the proceeds remain with the insurer and earnings paid on a monthly basis to the beneficiary?
interest only
A life insurance policy written on one contract for two people in which it is payable upon the first death is called
joint
which type of life insurance is normally associated with a payor benefit rider?
juvenile insurance
Which of these is not considered to be a common life insurance nonforfeiture option?
life income annuity
A limited payment whole life policy provides
lifetime protection
A guaranteed issue insurance policy has no
medical underwriting
The premium payment mode that results in the highest overall cost would be
monthly
Over the course of a year, which premium payment mode is most expensive?
montly
A whole life policy option where extended term insurance is selected is call a(n)
nonforfeiture option
A provision in a whole life policy that allows a policyowner to terminate the policy in return for a reduced paid-up policy of the same type is called a(n)
nonforfeiture provision
A beneficiary change can occur
normally at any time during the policy term
A provision that allows a policyowner to withdraw a policy's cash value interest free is a(n)
partial surrender
