Life Policy Provisions, Riders, and Options
The accelerated benefits provision will provide an early payment of the death benefit when the insured A. Needs to borrow money. B. Has earned enough credits. C. Becomes disabled D. Becomes terminally ill
Becomes terminally ill
Which of the following explains the policy owner's right to change beneficiaries, choose options, and receive proceeds of a policy? A. The consideration clause B. Assignment Rights C. Owner's Rights D. The entire contract provision
Owner's Rights
It a settlement option is not chosen by the policyowner or the beneficiary, which option will be used? A. Fixed period B. Fixed amount C. Lump Sum D. Life income
Lump Sum
If a beneficiary wants a guarantee that benefits paid from principal and interest would be paid for a period of 10 years before being exhausted, what settlement option should the beneficiary select? A. Fixed Period B. Life with period certain C. Fixed Amount D. Interest Only
Fixed Period
The type of settlement option which pays throughout the lifetimes of two or more beneficiaries is called A. Fixed Amount B. Joint Life C. Joint and Survivor D. Fixed Period
Joint and Survivor
An insured purchased a life insurance policy on his life naming his wife as primary beneficiary, and his daughter as contingent beneficiary. Under what circumstances could the daughter collect the death benefit? A. If the primary beneficiary predeceased the insured B. When the insured dies, the primary and contingent beneficiaries share death benefits equally C. With the primary beneficiary's written consent D. If the insured died from accidental means
If the primary beneficiary predeceased the insured
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? A. Payor benefit B. Jumping Juvenile C. Juvenile Premium Provision D. Waiver of Premium
Payor benefit
All of the following are true regarding the guaranteed insurability rider EXCEPT: A. The insured may purchase additional coverage at the attained age. B. The insured may purchase additional insurance up to the amount specified in the base policy. C. It allows the insured to purchase additional amounts of insurance without proving insurability only at specified dates or events. D. This rider is available to all insureds with no additional premium
This rider is available to all insureds with no additional premium
An absolute assignment is a A. Change of insurer B. Transfer of all ownership rights in a policy C. Transfer of some ownership rights in a policy D. Change of beneficiary
Transfer of all ownership rights in a policy
The insured under a $100,000 life insurance policy with a triple indemnity rider for accidental death was killed in a car accident. It was determined that the accident was his fault. The triple indemnity rider in the policy specifies that the death must not be contributed to by the insured in any manner. In this case, what will the policy beneficiary receive? A. $0 B. $50,000 (50% of the policy value) C. $100,000 D. $300,000 (triple the amount of policy value
$100,000
What is the waiting period on a Waiver of Premium rider in life insurance policies? A. 30 days B. 3 months C. 5 months D. 6 months
6 months
A couple own's a life policy with a Children's Term rider. Their daughter is reaching the maximum age of dependent coverage, so she will have to convert to perm insurance in the future. Which of the following will she need to provide for proof of insurability? A. Proof of insurability is not required. B. Medical exam C. Her parents' federal income tax receipts D. Medical exam and parents' medical history
Proof of insurability is not required.
When a whole life policy lapses or is surrendered prior to maturity, the cash value can be used to A. Purchase a term rider to attach to the policy B. Pay back all premiums owed plus interest C. Receive payments for a fixed amount D. Purchase a single premium policy for a reduced face amount
Purchase a single premium policy for a reduced face amount
An insured committed suicide one year after his life insurance policy was issued. The insurer will A. Pay nothing B. Refund the premiums paid C. Pay the policy's cash value D. Pay the full death benefit to the beneficiary
Refund the premiums paid
The sole beneficiary of a life insurance policy dies before the insured. If the policyowner does not amend the beneficiary designation, what will happen to the policy's death benefit? A. The state B. The beneficiary's estate C. The insured's estate D. Probate
The insured's estate
Which of the following applies to the 10-day free-look privilege? A. It can be waived only by the insurance company. B. It is granted only at the option of the agent. C. It permits the insured to return the policy for a full refund of premiums paid. D. It allows the insured 10 days to pay the initial premium.
It permits the insured to return the policy for a full refund of premiums paid.
Which of the following statements is TRUE about a policy assignment? A. It transfers rights of ownership from the owner to another person B. It is the same as a beneficiary designation C. It permits the beneficiary to designate the person to receive the benefits D. It authorizes and agent to modify the policy
It transfers rights of ownership from the owner to another person
Which rider, when attached to a permanent life insurance policy, provides an amount of insurance on every family member? A. Children's rider B. Additional insured rider C. Family term rider D. Spouse Rider
Family term rider
J applies for a life insurance policy on January 10th. The policy was issued on January 31. J's agent was vacationing at the time the policy was issued, so J did not receive the policy until February 18. J decides that he does not want the policy. When would J need to return the policy to the insurer in order to receive a full refund of premium paid? A. The time varies from one policy to another B. It was already too late when J received the policy because the 10-day free-look period had expired. C. Anytime, because the agent did not deliver the policy promptly D. February 28th, or 10 days after the time the policy is delivered
February 28th, or 10 days after the time the policy is delivered
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... A. Guaranteed Insurability Rider B. Paid-Up Additions Option C. Cost of Living Provisions D. Nonforfeiture Options
Guaranteed Insurability Rider
What is the benefit of choosing an extended term as a nonforfeiture option? A. It allows for coverage to continue beyond maturity date B. It can be converted to a fixed annuity C. It has the highest amount of insurance protection. D. It matures at age 100
It has the highest amount of insurance protection
When a reduced-paid up nonforfeiture option is chosen, what happens to the face amount of the policy? A. It is reduced to the amount of what the cash value would buy as a single premium. B. It is increased when extra premiums are paid. C. It decreases over the term of the policy. D. It remains the same as the original policy, regardless of any differences in value
It is reduced to the amount of what the cash value would buy as a single premium.
Which of the following is true of a children's rider added to an insured's permanent life insurance policy? A. The policy covers only the natural children of the insured. B. Each child covered must show evidence of insurability. C. It is term coverage that is convertible to permanent insurance at or prior to the child reaching the maximum coverage age. D. It is permanent insurance.
It is term coverage that is convertible to permanent insurance at or prior to the child reaching the maximum coverage age.
Which two terms are associated directly with the premium? A. Renewable or convertible B. Level or flexible C. Fixed or variable D. Term or permanent
Level or flexible
The dividend option in which the policy owner uses dividends to purchase a term policy for one year is referred to as the A. One-year term option B. Paid-Up option C. Accelerated endowment D. Paid-up additions
One-year term option
Which of the following riders would NOT cause the Death Benefit to increase? A. Cost of Living Rider B. Accidental Death Rider C. Payor Benefit Rider D. Guaranteed Insurability Rider
Payor Benefit Rider
If a life insurance policy has an irrevocable beneficiary designation, A. The beneficiary cannot be changed for at least 2 years. B. The owner can always change the beneficiary at will. C. The beneficiary cannot be changed. D. The beneficiary can only be changed with written permission of the beneficiary.
The beneficiary can only be changed with written permission of the beneficiary.
What is the purpose of a fixed-period settlement option? A. To provide a guaranteed income for a certain amount of time B. To settle the insurance company's liability C. To provide a guaranteed income for life D. To provide a guaranteed amount of money each month
To provide a guaranteed income for a certain amount of time
The two types of assignment are A. Absolute and partial B. Complete and partial C. Complete and proportionate D. Absolute and collateral
Absolute and collateral
Which of the following statements is TRUE concerning the Accidental Death Rider? A. This rider is only available to insureds over the age of 65 B. It is only available in group insurance C. It will pay double or triple the face amount D. It is also known as a triple indemnity rider
It will pay double or triple the face amount
A rider attached to a life insurance policy that provides coverage on the insured's family members is called the A. Other-insured rider B. Change of insured rider C. Juvenile rider D. Payor rider
Other-insured rider
When a life insurance policy was issued, the policyowner designated a primary and contingent beneficiary. Several years later, both the insured and the primary beneficiary died in the same car accident, and it was impossible to determine who died first. Which of the following would receive the Death Benefit? A. The insured's contingent beneficiary B. The insurance company C. The insured's estate D. The primary beneficiary's estate
The insured's contingent beneficiary
According to the entire contract provision, what document must be made part of the insurance policy? A. Copy of the original application B. Buyer's guide C. Agent's report D. Outline of coverage
Copy of the original application
An insured purchased a life policy in 2010 and died in 2020. The insurance company discovers at that time that the insured has misstated information about her insurance history on the application. What will the insurer do? A. Pay a decreased death benefit B. Sue for the right to not pay the death benefit C. Pay the death benefit D. Refuse to pay the death benefit because of the misstatement on the application
Pay the death benefit
All of the following are true regarding insurance policy loans EXCEPT A. Policy loans can be made on policies that do not accumulate cash value B. The amount of the outstanding loan and interest will be deducted from the policy proceeds when the insured dies C. The policy will terminate if the loan plus interest equals or exceeds the cash value of the policy D. Policyowners can borrow up to the full amount of their whole lie policy's cash value
Policy loans can be made on policies that do not accumulate cash value
A father purchases a life insurance policy on his teenage daughter and adds the Payor Benefit rider. In which of the following scenarios will the rider waive the payment of premium? A. If the daughter is disabled for any length of time B. If the father is disabled for more than 6 months C. If the father is disabled for at least a year D. If the daughter is disabled for more than 3 months
If the father is disabled for more than 6 months
The policy owner pays for her life insurance annually. Until now, she has collected a nontaxable dividend check each year. She has decided that she would rather use the dividends to help pay for her next premium. What option would allow her to do this? A. Reduction of premium B. Paid-up Addition C. Accumulation at interest D. Cash Option
Reduction of Premium
What is the advantage of reinstating a policy instead of applying for a new one? A. The cash values have gained interest while the policy was lapsed. B. The original age is used for premium determination. C. Proof of insurability is not required. D. The face amount can be increased
The original age is used for premium determination.
Which is true about a spouse term rider? A. Coverage is allowed for an unlimited time B. The rider is decreasing term insurance C. Coverage is allowed up to age 75 D. The rider is usually level term insurance
The rider is usually level term insurance
Which is the clause that describes the method of paying the death benefit in the event that the insured and beneficiary are both killed in the same accident? A. Spendthrift Clause B. Settlement Clause C. Nonforfeiture Clause D. Common Disaster Clause
Common Disaster Clause
The provision which states that both the policy and a copy of the application form the contract between the policyowner and the insurer is called the A. Entire Contract B. Total Contract C. Aleatory Contract D. Complete Contract
Entire Contract
What type of insurance would be used for a Return of Premium rider? A. Annually Renewable Term B. Increasing Term C. Level Term D. Decreasing Term
Increasing Term
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? A. Joint and survivor B. Fixed amount option C. Interest only option D. Life income with period certain
Interest only option
When an insured under a life insurance policy died, the designated beneficiary received the face amount of the policy, as well as the refund of all the premiums paid. Which rider is attached to the policy? A. Decreasing term B. Accidental death C. Return of premium D. Cost of living
Return of premium
A father owns a life insurance policy on his 15-year-old daughter. The policy contains the optional Payor Benefit rider. If the father becomes disabled, what will happen to the life insurance premiums? A. The premiums will become tax deductible until the insured's 18th birthday. B. Since it is the policy owner, and not the insured, who has become disabled, the life insurance policy will not be affected. C. The insured will have to pay premiums for 6 months. If at the end of this period the father is still disabled, the insured will be refunded the premiums. D. The insured's premiums will be waived until she is 21.
The insured's premiums will be waived until she is 21.
