part 2

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? The total premiums paid minus any policy loans Nothing $50,000 $100,000

$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? Premiums paid plus interest Nothing. Claim will be denied $50,000 minus any outstanding policy loans $100,000 because the cause of death was accidental

$50,000 minus any outstanding policy loans

The option that provides an additional death benefit for a limited amount of time at the lowest possible cost is called a(n) Term rider Accidental Death and Dismemberment rider (AD&D) Family rider Annuity

Accidental Death and Dismemberment rider (AD&D)

The Consideration clause in a life insurance contract contains what pertinent information? Summary of benefits Offer and acceptance Entire Contract Amount of premium payments and when they are due

Amount of premium payments and when they are due

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 Assignment Grace Period Waiver of Premium

Automatic Policy Loan

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 Claim will be paid in full Claim will be partially paid Claim will be decided by an arbitrator

Claim will be denied

Which of these actions is taken when a policyowner uses a Life Insurance policy as collateral for a bank loan? Revocable assignment Beneficiary change Irrevocable assignment Collateral assignment

Collateral assignment

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? Misrepresentation Exclusion Collateral assignment Concealment

Exclusion

Which life insurance rider typically appears on a Juvenile life insurance policy? Decreasing term rider Inflation rider Payor Benefit rider Waiver of Premium rider

Payor Benefit rider

The provision that can be used to put an insurance policy back in force after it has lapsed due to nonpayment is called Reinstatement Grace period Automatic premium loan Waiver of premium

Reinstatement

Which of these life insurance riders allows the applicant to have excess coverage? Automatic Premium Loan rider Waiver of Premium rider Guarantee Insurability rider Term rider

Term rider

L takes out a life insurance policy and dies 10 years later. During the claim process, the insurer discovers that L had understated her age on the application. Under the Misstatement of Age provision, the insurer will pay the death benefit in full adjust the death benefit to an increased amount adjust the death benefit to a reduced amount deny the claim

adjust the death benefit to a reduced amount

What action will an insurer take if an interest payment on a policy loan is not made on time? cancel the policy if not paid within the grace period automatically add the amount of interest due to the loan balance subtract from any dividends owed disallow any further loans

automatically add the amount of interest due to the loan balance

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 Current wife Estate Split equally between the ex-wife and current wife

ex-wife

n a life insurance policy, which feature states that the policy will not cover certain risks? Exception Exclusion Ejection Expulsion

exclusion

What does the insuring agreement in a Life insurance contract establish? An insurer's basic promise The insurance policy's grace period An insurer's required reserve amount The obligations of the beneficiary

An insurer's basic promise

What action can a policyowner take if an application for a bank loan requires collateral? Utilize accelerated benefits provision Borrow against policy cash value and use as a down payment Assign policy ownership to the bank Name bank as beneficiary

Assign policy ownership to the bank

A policy loan is made possible by which of these life insurance policy features? Extended term provision Cash value provision Owner's rights provision Consideration clause

Cash value provision

Which provision prevents an insurer from changing the terms of the contract with the policyowner by referring to documents not found within the policy itself? Policy Exclusion Incontestable Entire Contract Provision Assignment

Entire Contract Provision

A long-term care rider in a life insurance policy pays a daily benefit in the event of which of the following? Critical illness Terminal illness Inability of the insured to perform more than 2 Activities of Daily Living (ADL's) Inability of the insured to maintain insurance premiums due to unemployment

Inability of the insured to perform more than 2 Activities of Daily Living (ADL's)

All of these statements about the Waiver of Premium provision are correct EXCEPT A waiting period must pass before becoming eligible for benefits Waiver of Premium is available on both permanent and term insurance policies Insured must be eligible for Social Security disability for claim to be accepted Insured must be totally disabled to qualify

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

Which of these are NOT an example of a Nonforfeiture option? Extended Term Reduced Paid-up Cash Surrender Life Income

Life Income

Which of these is NOT considered to be a right given to a policyowner? Surrendering the policy's cash value Modify a provision in the insurance contract Assignment of ownership Change the beneficiary, if revocable

Modify a provision in the insurance contract

P is the insured on a participating life policy. Which statement is true if P's premiums are waived due to a disability? P cannot borrow against the policy's cash value while disabled P will have to pay income taxes on the amount of premiums waived P will still receive declared dividends P cannot assign ownership of the policy while premiums are being waived

P will still receive declared dividends

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 Accumulate at Interest Reduced Premiums Cash

Paid-Up Additional Insurance

A life insurance policy which ensures that the premium will be paid if the insured becomes disabled has what kind of rider attached? Accelerated Benefits Waiver of Premium Cost of Living Return of Premium

Waiver of Premium

Which type of life policy contains a monthly mortality charge as well as self-directed investment choices? Joint Life Adjustable Life Variable Universal Life Universal Life

Variable Universal Life

A potential client, age 40, would like to purchase a Whole Life policy that will accumulate cash value at a faster rate in the early years of the policy. Which of these statements made by the producer would be correct? Straight life accumulates faster than Limited-pay Life 20-Pay Life accumulates cash value faster than Straight Life Cash value accumulation of both 20-Pay Life and Straight Life depend on the insurer's financial rating 20-Pay Life and Straight Life accumulate cash value at the same rate

20-Pay Life accumulates cash value faster than Straight Life

Which of the following Dividend options results in taxable income to the policyowner? Paid-up Additions Cash Accumulation at Interest Reduced Premium

Accumulation at Interest

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 Company pays twice the face amount under the double indemnity clause Claims are paid in full Premiums are returned under the Consideration clause

Claims are denied under the Suicide clause of the policy

Which of these statements about a Guaranteed Insurability Option rider is NOT TRUE? Coverage can be added at specific events such as marriage or having a child Evidence of insurability is not required when the option is exercised Evidence of insurability is required when the option is exercised Coverage can be added at specific ages

Evidence of insurability is required when the option is exercised

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 Automatic Premium Loan provision Accelerated Benefits provision Consideration clause

Policy Loan provision

What benefit does the Payor clause on a Juvenile Life policy provide? Allows payor to assign ownership in the event payor becomes disabled Allows payor to increase face amount without providing evidence of insurability Premiums are waived if juvenile becomes disabled Premiums are waived if payor becomes disabled

Premiums are waived if payor becomes disabled

B owns a Whole Life policy with a guaranteed insurability option that allows him to purchase, without evidence of insurability, stated amounts of additional Term Life coverage at any time additional Term Life coverage at specified intervals additional Whole Life coverage at any time additional Whole Life coverage at specified times

additional Whole Life coverage at specified times

When does a Guaranteed Insurability Rider allow the insured to buy additional coverage? 10 year increments at future dates specified in the contract with proof of insurability required at future dates specified in the contract with no evidence of insurability required at any time while policy is active

at future dates specified in the contract with no evidence of insurability required

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 type of life insurance S's attained age dividend amount used toward purchase beneficiary's age

beneficiary's age

Variable Whole Life Insurance can be described as both an insurance and securities product an insurance product only a securities product only the insurance company assumes the investment risk

both an insurance and securities product

Which of the following provisions guarantees that premiums will be waived if a Juvenile Life policyowner becomes disabled? Family Maintenance clause Payor clause Assignment provision Automatic Premium Loan provision

payor clause

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? Refund of premiums paid plus interest Nothing, due to actively serving in the armed forces Double the face amount because cause of death was accidental The full face amount

the full face amount

The Consideration clause in a life insurance policy indicates that a policyowner's consideration consists of a completed application and the initial premium agreeing to a physical examination delivery of policy disclosure of any medical conditions

the initial premium