Life Provision Test Review

K pays on a $20,000 20-Year Endowment policy for 10 years and dies from an automobile accident. How much will the insurance company pay the beneficiary?

$20,000 death benefit

S buys a $50,000 whole life policy with a $50,000 Accidental Death and Dismemberment rider. S dies 1 year later of natural causes. How much will the insurer pay the beneficiary?

$50,000

T took out a $50,000 life insurance policy with an Accidental Death and Dismemberment rider. Five years later, T commits suicide. How much will the insurer pay?

$50,000

P purchases a $50,000 whole life insurance policy in 2005. One of the questions on the application asks if P engages in scuba diving, to which P answers "No". The policy is then issued with no scuba exclusions. In 2010, P takes up scuba diving and dies in a scuba-related accident in 2011. What will the insurer pay to P's beneficiary?

$50,000 minus any outstanding policy loans

Which of the following Dividends options results in taxable income to the policyowner?

Accumulation at interest

The Consideration clause in a life insurance contract contains what pertinent information?

Amount of premium payments and when they are due

What action can a policyowner take if an application for a bank loan requires collateral?

Assign policy ownership to the bank

S has a Whole Life policy with a premium payment due soon. Which provision would keep the policy in force if S does not make the required payment and the policy has adequate cash value from which the premium payment can be made?

Automatic Policy Loan

M had an annual life insurance premium payment due January 1. She died January 10 without making the premium payment. What action will the insurer take?

Pay face amount minus the past due premium

Which of the following provisions guarantees that premiums will be waived if a Juvenile Life policyowner becomes disabled?

Payor Clause

Which life insurance rider typically appears on a Juvenile life insurance policy?

Payor benefit rider

A provision in a life insurance policy that pays the policyowner an amount that does not surpass the guaranteed cash value is called the

Policy loan provision

Which of these Nonforfeiture Options continue a build-up of cash value?

Reduced Paid-Up

The provision that can be used to put an insurance policy back in force after it has lapsed due to nonpayment is called

Reinstatement

Which of these provisions require proof of insurability after a policy has lapsed?

Reinstatement

J let her life insurance policy lapse 8 months ago due to nonpayment. She can reestablish coverage under which of the following provisions?

Reinstatement provision

S buys a $10,000 Whole Life policy in 2003 and pays an annual premium of $100. S dies 5 years later in 2008 and the insurer pays the beneficiary $10,500. What kind of rider did S include on the policy?

Return of premium rider

Which of these life insurance riders allows the applicant to have excess coverage?

Term rider

D was actively serving in the Marines when he was killed in an automobile accident while on leave. His $100,000 Whole life policy contains a War Exclusion clause. How much will D's beneficiary's receive?

The full face amount

A life insurance policy which ensures that the premium will be paid if the insured becomes disabled has what kind of rider attached?

Waiver of premium

What does the ownership clause in a life insurance policy state?

Who the policyowner is and what rights the policy owner is entitled to

B owns a Whole Life policy with a guaranteed insurability option that allows him to purchase, without evidence of insurability, stated amounts of

additional Whole Life coverage at specified times

A policy loan is made possible by which of these life insurance policy features?

Cash value provision

N is covered by a Term Life policy and does not make the required premium payment which was due August 1. N dies September 15. What action will the insurer take?

Claim will be denied

How do life insurance companies handle cases where the insured commits suicide within the contract's stated Contestable period?

Claims are denied under the Suicide Clause of the policy

All of these statements about the Waiver of Premium provision are correct EXCEPT

Insured must be eligible for Social Security disability for claim to be accepted

The agreement in a life insurance contract that states a specific sum of money will be paid to a designated person upon an insured's death is called a(n)

Insuring agreement

In a Life insurance contract, an insurance company's promise to pay stated benefits is called the

Insuring clause

The Accidental Death and Dismemberment (AD&D) provision in a life insurance policy would pay additional benefits if the insured

Is blinded in an accident

Which of these are NOT an example of a Nonforfeiture option?

Life income

The Accelerated Death Benefit provision in a life insurance policy is also known as a(n)

Living Benefit

An insured's inability to perform two or more activities of daily living may trigger which type of policy rider?

Long term care

Which of these is NOT considered to be a right given to a policyowner?

Modify a provision in the insurance contract

Which of the following statements is CORRECT about accelerated death benefits?

Must have a terminal illness to qualify

In a life insurance policy, which provision states who may select policy options, designate and name a beneficiary, and be the recipient of any financial benefits from the policy?

Owner's Rights

A young, married teacher has two children and owns a Whole Life policy. If the teacher wants an increasing Death Benefit to protect against inflation, the teacher should select which of the following Dividend Options?

Paid-up Additional Insurance

All of the following statements are true regarding a policy's Grace period EXCEPT

Past due premiums are waived

What action will an insurer take if an interest payment on a policy loan is not made on time?

automatically add the amount of interest due to the loan balance

S would like to use dividends from her life insurance policy to purchase paid-up additions. All of these would be factors that determine how much coverage can be purchased EXCEPT

beneficiary's age

All of these Settlement options involve the systematic liquidation of the death proceeds in the event of the insured's death EXCEPT

interest only

Which statement regarding the Misstatement of Age provision is considered to be true?

Coverage will be adjusted to reflect the insured's true age if a the Misstatement of Age is discovered

Additional coverage can be added to a Whole Life policy by adding a(n)

Decreasing term rider

What provision in a life insurance policy states that the application is considered part of the contract?

Entire contract provision

Which of these statements about a Guaranteed Insurability Option rider is NOT TRUE?

Evidence of insurability is required when the option is exercised

D is the policyowner and insured for a $50,000 life insurance policy. The beneficiary is D's wife. D and his wife divorce and D remarries, transferring ownership of his policy to his new wife. If D dies without making any further changes, to whom will the policy proceeds be paid to?

Ex-wife

What is the Suicide provision designed to do?

safeguard the insurer from an applicant who is contemplating suicide

The Consideration clause in a life insurance policy indicates that a policyowner's consideration consists of a completed application and

the initial premium

When is the face amount of a Whole Life policy paid?

when the insured dies or at the policy's maturity date, whichever happens first

A Return of Premium life insurance policy is

whole life and increasing term

P died five years after purchasing a life policy. While investigating the claim, the insurer discovered material misrepresentations made by P during the application process. Which of these actions will the insurer take?

Beneficiary will be paid the Death Benefit

N is a student pilot with a large life insurance policy. Which of these features would limit the insurer's obligation in the event N was killed while flying as a student pilot?

Exclusion

P is the insured on a participating life policy. Which statement is true if P's premiums are waived due to a disability?

P will still receive declared dividends