Life insurance policy provisions, options, and riders
During partial withdrawal from a universal life policy, which portion will be taxed?
interest
If a settlement option is not chosen by the policyowner or the beneficiary, which option will be used?
lump sum
An insured purchased a 15-year level term life insurance policy with a face amount of $100,000. The policy contained an accidental death rider, offering a double indemnity benefit. The insured was severely injured in an auto accident, and after 10 weeks of hospitalization, died from the injuries. How much will the beneficiary receive from the policy?
200,000
An insured owns a $50,00o whole lITe policy. At age 47, the insured decides to cancel his policy and exercise the extended term option for the policy's cash value, which is currently $20,000. What would be the face amount of the new term policy?
50,000
Which of the following is TRUE about a class designation?
Beneficiaries are not identified by name
Which of the following best describes fixed-period settlement option?
Both the principal and interest will be liquidated over a selected period of time.
An insured receives an annual life insurance dividend check. What term best describes this arrangement?
Cash option
According to the entire contract provision, what document must be made part of the insurance policy?
Copy of the original application
When the insured selects the extended term nonforfeiture option, the cash value will be used to purchase term insurance with what face amount?
Equal to the original policy for as long as the cash values will purchase
When the insured selects the extended term nonforfeiture option, the cash value will be used to purchase term insurance with what face amount?
Equal to the original policy for as long as the cash values will purchase.
Which nonforfeiture option has the highest amount of insurance protection?
Extended term
An individual is purchasing a permanent life insurance policy with a face value of $25,000. While this is all the insurance that he can afford at this time, he wants to be sure that additional coverage will be available in the future. Which of the following options should be included in the policy?
Guarantee insurability option
If a life policy allows the policyowner to make periodic additions to the face amount at standard rates, without proving insurability, the policy includes a
Guaranteed insurability rider
What type of insurance would be used for a Return of Premium rider?
Increasing Term
During partial withdrawal from a universal life policy, which portion will be taxed?
Interest
The policyowner wants to make sure that upon his death, the life policy will pay a portion of the proceeds annually to his spouse, but that the principal will be paid to their children when they reach a certain age. Which settlement option should the policyowner choose?
Interest only option
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
A rider attached to a life insurance policy that provides coverage on the insured's family members is called the
Other-insured rider
Which of the following allows the insurer to relieve a minor insured from premium payments if the minor's parents have died or become disabled?
Payor benefit
Statements made by an applicant for a life insurance policy which are true to the best of one's knowledge are referred to as
Representations
The interest earned on policy dividends is
Taxable
If an insured continually uses the automatic premium loan option to pay the policy premium
The policy will terminate when the cash value is reduced to nothing
Which of the following is true about warranties?
They are guaranteed to be true.
The paid-up addition option uses the dividend
To purchase a smaller amount of the same type of insurance as the original policy.
An insured owns a life insurance policy. To be able to pay some of her medical bills, she withdraws a portion of the policy's cash value. There is a limit for a withdrawal and the insurer charges a fee. What type of policy does the insured most likely have?
Universal Life
The Waiver of Cost of Insurance rider is found in what type of insurance?
Universal Life
Life income joint and survivor settlement option guarantees
income for 2 or more recipients until they die
An insured has a continuous premium whole life policy. She would like to use the policy dividends to pay off her policy sooner than would have been possible otherwise. What dividend option could she use?
paid up option
Which of the following riders would NOT cause the Death Benefit to increase?
payor benefit rider
Statements made by an applicant for a life insurance policy which are true to the best of one's knowledge are referred to as
representations