Life Policy Provisions, Riders and Options
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
What is the benefit of choosing extended term as a nonforfeiture option?
it has the highest amount of insurance protection
The insured had his wife named as the beneficiary of his life insurance policy. To ensure that his wife had income for life after the insured's death, he chose the life income settlement option. The amount of payments will be determined by taking into account all of the following EXCEPT
the insured's age at death
Which provision of a life insurance policy states the insurer's duty to pay benefits upon the death of the insured, and to whom the benefits will be paid?
insuring clause
What is the other term for the cash payment settlement option?
lump sum
The dividend option in which the policyowner uses dividends to purchase a term policy for one year is referred to as the
one-year term option
Which option is being utilized when the insurer accumulates dividends at interest and then uses the accumulated dividends, plus interest, and the policy cash value to pay the policy up early?
paid-up option
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?
If the father is disabled for more than 6 months
What type of insurance would be used for a Return of Premium rider?
increasing term
Which of the following riders would NOT cause the Death Benefit to increase?
payor benefit rider
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?
the insured's premiums will be waived until she is 21
The validity of coverage under a life insurance policy may not be contested, except for nonpayment of premium, after the policy has been in force for at least how many years?
2 years
When a reduced-paid up nonforfeiture option is chosen, what happens to the face amount of the policy?
it is reduced to the amount of what the cash value would buy as a single premium
What is the waiting period on a Waiver of Premium rider in life insurance policies?
6 months
Which is NOT true about beneficiary designations?
The beneficiary must have insurable interest in the insured.
The two types of assignments are
absolute and collateral
If a life insurance policy has an irrevocable beneficiary designation,
the beneficiary can only be changed with written permission of the beneficiary
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
entire contract
What 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?
common disaster clause
Which rider, when attached to a permanent life insurance policy, provides an amount of insurance on every family member?
family term rider
When an insured under a life insurance policy died, the designated beneficiary received the face amount of the policy as well as a refund of all of the premiums paid. Which rider is attached to the policy?
return of premium
An insured has chosen joint and 2/3 survivor as the settlement option. What does this mean to the beneficiaries?
the surviving beneficiary will continue receiving 2/3 of the benefit paid when both beneficiaries were alive
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?
100,000
A policyowner who is also the insured wants to name her husband as the beneficiary of her life policy. She also wishes to retain all of the rights of ownership. The policyowner should have her husband named as the
revocable beneficiary
Children's riders attached to whole life policies are usually issued as what type of insurance?
term
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
Which of the following is TRUE about nonforfeiture values?
they are required by state law to be included in the policy
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?
fixed period
Which is TRUE about the cash surrender nonforfeiture option?
funds exceeding the premium paid are taxable as ordinary income
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?
guaranteed insurability option
Life income joint and survivor settlement option guarantees
income for 2 or more recipients until they die
Which two terms are associated directly with the premium?
level and flexible
An insured pays $1,200 annually for her life insurance premium. The insured applies this year's $300 worth of accumulated dividends to the next year's premium, thus reducing it to $900. What option does this describe?
reduction of premium
