Life Policy Riders, Provisions, Options, and Exclusions

An insured purchased a life policy in 2010 and died in 2017. The insurance company discovers at the that time that the insured had concealed information during the application process. What can they do?

Pay the death benefit

Which nonforfeiture options provides coverage for the longest period of time?

Reduced paid up

What provision in an insurance policy extends coverage beyond the premium due date?

grace period

With the interest only settlement option, what happens to the policy's death benefit?

The beneficiary will only recieve payments of the interest earned on the death benefit.

Fixed Amount Settlement Option

The policyowner sets the amount of each installment

In a reduce paid up policy, the original policy's cash value is used as

a single premium to buy a whole new permanent policy with a reduced death benefit from the original.

Guaranteed Insurability Option

allows the insured to purchase specific amounts of additional insurance at specific times without proving insurability

Life income option settlement

also known as straight life, provides the recipient with an income that he or she cannot outlive. it stops at the beneficiary's death.

Life income with period certain

guarantees payment for life with a minimum period of time, generally 10 or 20 years; if beneficiary dies before the period ends, then someone will receive payments for the remaining period of time

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 reffered to as

one year term option

paid up additions vs. paid up option

paid up additions increase the face amount paid up option to pay the policy earlier than planned.

The paid up addition option uses the dividends to

purchase a smaller amount of the same type of insurance as the original policy.

Extended Term Nonforfeiture Option

single premium to purchase the same face amount as the original for as long as a period of time the cash will buy at the insured's current age.

Nonforfeiture values are required by

state law to be included in the policy

The death occurred within the mandatory 30 day grace period. Past due premium would be

subtracted from the face amount of the policy

The interest earned on policy dividends is

taxable

What is the waiting period on a Waiver of Premium rider in life insurance policies?

6 months

Insuring Clause

A general statement that identifies the basic agreement between the insurance company and the insured, usually located on the first page of the policy.

Which of the following named beneficiaries would Not be able to receive the death benefit directly from the insurer in the event of the insured's death?

A minor son of the insured.

An insured receives an annual life insurance dividend check. What term best describes this arrangement?

Cash option. allows the insurer to send the policy holder an annual, nontaxable dividend check.

The policyowner chooses one of the following nonforfeiture options by policy surrender or lapse with cash values:

Cash surrender value, reduced paid-up insurance, extended term insurance.

All of the following are dividend option except a.) Fixed period installments b.) Accumulated at interest c.) Reduction of premium d.) Paid-up additions

Fixed period installment

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

Incontestability Clause

If an insurer wishes to contest any statement on an application they must do so within 2 years.