Policy Riders, Provisions, Options and Exclusions

In a case where the primary beneficiary predeceases the insured, in the event of the insured's death, the death benefit proceeds will be paid to a) The policyowner. b) The insurance company. c) The contingent beneficiary. d) The insured's spouse.

c) The contingent beneficiary.

An insured pays an annual premium to his insurer. In return, the insurer promises to pay benefits in accordance with the terms of the contract. This is called a) Consideration. b) Conditions. c) Utmost good faith. d) Acceptance.

a) Consideration.

A policyowner fails to pay the premium due on his whole life policy after the grace period passes, but the policy remains in force. This is due to what provision? a) Incontestability period b) Assignment c) Automatic premium loan d) Waiver of premium

c) Automatic premium loan

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.

c) It is term coverage that is convertible to permanent insurance at or prior to the child reaching the maximum coverage age.

What is the benefit of choosing extended term as a nonforfeiture option? a) It matures at age 100. b) It allows for coverage to continue beyond maturity date. c) It can be converted to a fixed annuity. d) It has the highest amount of insurance protection.

d) It has the highest amount of insurance protection

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

a) Fixed period

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 an agent to modify the policy.

a) It transfers rights of ownership from the owner to another person.

The type of settlement option which pays throughout the lifetimes of two or more beneficiaries is called a) Joint and survivor. b) Fixed period. c) Fixed amount. d) Joint life.

a) Joint and survivor.

Which of the following, when attached to a permanent life insurance policy, allows the policyowner to customize the policy to provide an additional amount of temporary insurance on the insured, or allows amounts of temporary insurance to cover other family members? a) Accidental death and dismemberment rider b) Guaranteed insurability rider c) Change of insured rider d) Term rider

d) Term rider

An insured has had a life insurance policy that he purchased 3 years ago when he was 40 years old. He is killed in an automobile accident and it is discovered that he is actually 45 years old, and not 43, as stated on the application. What will the company do? a) Pay the full death benefit and refund excess premium b) Pay a reduced death benefit c) Pay the full death benefit d) Pay nothing; there was a misrepresentation on the application

b) Pay a reduced death benefit

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 a) Projected interest rates. b) Face amount of the policy. c) The insured's age at death. d) The beneficiary's life expectancy.

c) The insured's age at death.

A 40-year old man buys a whole life policy and names his wife as his only beneficiary. His wife dies 10 years later. He never remarries and dies at age 61, leaving 2 grown-up children. Assuming he never changed the beneficiary, the policy proceeds will go to a) Both children who share equally on a per-capita basis. b) The insurance company. c) The insured's estate. d) The insured's firstborn child.

c) The insured's estate.

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.

d) Purchase a single premium policy for a reduced face amount.

Nonforfeiture values guarantee which of the following for the policyowner? a) That the death benefit will be paid in a lump sum b) That the policy premiums will never increase c) That the cash value will not be lost d) That the dividends will be paid annually

c) That the cash value will not be lost

Question 12 of 15 Which is TRUE about the cash surrender nonforfeiture option? a) The policy remains active for some time after the policyholder opts for cash surrender. b) The policyholder receives the original cash value of the policy. c) Funds exceeding the premium paid are taxable as ordinary income. d) After the cash surrender, the insured is covered for a grace period of 1 month.

c) Funds exceeding the premium paid are taxable as ordinary income.