Life Insurance Policy Provisions

Beginning on the policy delivery date, the free look provision must be provided for no less than __ days

10

The minimum length of a free-look period is _____ days

10

What percentage of premium must be returned to the policy owner if a policy is returned during the free-look period?

100% of the premium paid

Suiside is covered once the policy has been issued for ___ years

2

An insurer must respond to an applicant for reinstatement within __ days of receiving the paperwork.

45

A fixed rate of no more than ______% may be assessed on a policy loan.

8%

What type of assignment is used to secure a loan?

A collateral assignment

The transfer of all policy rights to another party is referred to as _____

Absolute assignment

What would a parent use to change ownership of a child's policy?

An absolute assignment

How are monthly premiums generally paid?

An electronic fund transfer through a person's bank

Which type of trust is created during the life of the insured?

An inter vivos trust

Which beneficiary depiction may not be changed without permission from the beneficiary?

An irrevocable beneficiary depiction

What are the four common modes of premium payment?

Annual, semiannual, quarterly, and monthly

What two items constitute an applicant's consideration?

Application information and initial premium

Only an ________________ of an _______ is provided the authority to make or waive a policy provision.

Approved officer, Insurer

What is another name for the transfer of ownership?

Assignment

_______ is the transfer of policy rights to another party

Assignment

When must the optional APL provision be selected?

At the time of application

Identify the acronym: APL

Automatic premium loan

The maximum loan value is equal to the ______ minus any projected ______.

Cash value, Interest

_________ is the transfer of some, but not all, policy rights to another party.

Collateral assignment

Death by suicide is not covered during the first __ years of policy issue.

Death by suicide is not covered during the first 2 years of policy issue

If no beneficiary is listed, policy benefits will be paid to the insured's ________

Estate

True or False: Everyone attempting to reinstate a policy within 3 years of its lapse date will be accepted

False

True or False: A whole life to term conversion with the same company does not require evidence of insurability

False, Conversion from whole life to term will always require evidence of insurability

True or False: Any immediate family member may take a loan out against a person's insurance policy

False. Only the policy owner has the right to take a loan out against a policy

True or False: Beneficiary listings may be changed by the insurer using a change of beneficiary form.

False. The policy owner, not the insurer, may change the beneficiary

When would the APL option be activated?

Following the expiration of the grace period

How long does an insurer have to contest the validity of a claim based on false application information?

For two years following the issuance of the policy

A women listed as a man on an application will probably receive a ______ benefit at death

Higher

Within a contract, where does an insurer make its promise to pay benefits?

In the insuring Clause

A policy is said to be _______ after the contract has been issued for _____ or more years

Incontestable, 2

Any policy modifications must be endorsed by the _________ and __________ to the policy.

Insurer, attached

What does per capita beneficiary depiction mean?

It means per person or per head

What happens to a policy if the premium is not paid during the grace period?

It will lapse for nonpayment of premium

List some examples of policyowners rights

Name/Change a beneficiary, select premium mode, receive dividends, take loans against the contract, and assign benefits

Do beneficiaries have contractual rights to a contract?

No

Does a beneficiary have any owner's rights?

No

Is interested paid on a policy loan tax-deductible

No

How long is the grace period?

No less than 31 days

Policy loan interest is due each year on the ________ anniversary date.

Policy

Who selects how often a policy premium is paid?

Policy owner

First-in-line beneficiaries are also known as _______, second-in-line as __________, and third-in-line as ________.

Primary, Contingent, Tertiary

Benefit proceeds left to an insured's estate will be decided by a _________ court.

Probate

Would it be better to reinstate an existing policy or attempt to purchase a new policy?

Reinstate the original policy since premium is based on insured's age at issuance and may result in lower premiums

The ___ war exclusion only excludes benefits if death is the direct result of battle.

Results

what is another name for the free-look prevision?

The 10-Day right to examine

What clause allows an insurer to pay a portion of the death benefit to an individual who paid for funeral expenses?

The Facility of Payment Clause

What is the name for an insurer's consideration to the applicant?

The Warranty

Which payment mode would be the least expensive over the course of a year?

The annual payment mode

Explain the simultaneous Death Act (common disaster)

The assumption that the primary beneficiary died prior to the insured when die in a common accident.

If an insured's age is misstated, what will eventually happen to any future claim

The benefit will be adjusted to reflect the misstated age.

What clause is a summary of the entire contract and is usually found on the first or face page of the contract?

The insuring clause

What provision requires an adjustment in benefits if the insured's age has been improperly recorded?

The misstatement of age provision

Which provision allows an insurer to charge a service fee for the collection of premium?

The payment of premium provision

which beneficiary designation means per family line or lineage?

The per stirpes beneficiary designation

If death occurs with an outstanding policy loan, what is subtracted from the death benefit?

The remaining amount of the loan plus any accrued interest

What right does the APL option provide to the insurer

The right to borrow from the cash value to pau overdue premium

List two examples of an owner's right

The right to change beneficiary or premium payment mode

Explain the concept of absolute assignment

The transfer of all policy rights to another

What is the APL option designed to prevent?

The unintentional lapse of a policy

To whom is the interest earned on assets retained by an insurer taxed?

To the beneficiary

True or False: A term-to-term policy conversion with the same company does not require evidence of insurability

True

True or False: The entire contract provision is a mandatory provision

True

A _____ is usually established when benefits are payable to a minor

Trust

A grace period is designed to prevent the _______ lapse of a policy

Unintentional

What is the most common life insurance policy exclusion?

War

Which type of policy type allows for cash value loans--term or whole life?

Whole life

Is a grace period a required provision?

Yes

Is an insured afforded coverage during the grace period?

Yes

Define the term consideration

an exchange of values between two parties

Taking a cash value policy loan __________ create a taxable event.

does not

Understating age on a life application will mean a _______ death benefit will be paid.

lower

A _______ is a trust listed in a person's will.

testamentary

Name some common policy exclusions

war, private aviation, suicide (first 2 years), dangerous hobbies or occupations, and criminal acts