Pt. 2 Additional Life Provisions Questions

61. T took out a $50,000 life ins. Policy with an Accidental Death & Dismemberment rider. Five years later, T commits suicide. How much will the insurer pay

$100,000 or $50,000.

14. An ins. Company may cancel a life insurance policy under which of the following conditions

A policy loan interest payment has not been paid; The outstanding loan policy exceeds the cash value of the policy.

22. Which of the following is an example of a "nonforfeiture value"

A term life ins. Policyowner converts his term life ins. to permanent coverage or After a policy owner cancels his/her perm. Policy, the cash value accumulation must e made available to the policyowner.

73. What does the insuring agreement in a Life insurance contract establish

An insurer's basic promise; The insurance policy's grace period.

62. When can a lapsed life insurance policy usually be reinstated

Anytime during the grace period or within 3-5 years of the policy lapsing.

54. Which provision prevets an insurer from changing the terms of the contract with the policyowner by referring to documents not found within the policy itself

Assignment or Entire contract.

42. Which dividend option allows a policyowner to use his/her dividends to buy life insurance on a single premium basis

Cash option or paid-up additions option.

43. Which of the following dividend options allows the continuation of cash value accumulation

Cash surrender or Reduced paid-up Insurance.

81. Which type of assignment transfers a portion of the policyowner's right to another party in order to secure a debt to that party

Debt assignment; Collateral assignment.

46. The Consideration clause in a life ins. Contract contains what pertinent information

Entire contract or Amount of premium payments and when they are due.

51. In a life ins. 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

Entire contract or Owner's Rights

11. Which of the following is considered the "automatic" Nonforfeiture Option that most insurers will use

Extended Term or 1-year term.

8. Which type of life ins. Rider allows a policyowner to increase the leel of coverage to keep up with inflation

Guaranteed insurability rider; or cost of living rider.

58. Which of the following events would allow a policyowner with a guaranteed insurability rider purchase additional life insurance

Having a child; Getting Married or All of the above.

52. Tina has an ins. Policy with a 10-day fre look provision. Which of these statements is correct

Her policy can be returned for 100% refund of the premium within 10 days from the date the policy is delivered or

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

Insured must be totally disability to quality or Insured must be eligible for Social Security disability for claim to be accepted.

31. The agreement in a life ins. Contract that states a specific sum of money will be paid to a designated person upon an insured's death is called a

Insuring agreement or Entire Contract provision.

36. Bob has an ins. Policy that allows him to keep the policy in force until the next premium is due plus 30 days thereafter Bob's policy

Must have build cash value; contains a grace period.

28 Which of these actions is taken when a policyowner uses a Life Insurane policy as collateral for a bank loan

Revocable assignment; Collateral assignment

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

Substract from any dividends owed or automatically add the amount of interest due to the loan balance.

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

Surrender policy for cash value; Modify a provision in the insurance contract.

5. Who is considered the individual that retains all rights values, and options of an ins. Policy

The beneficiary; the policyowner.

85. Who is considered the individual that retains all rights values, and options of an ins. Policy

The beneficiary; the policyowner.

83. When a misrepresentation on a life ins. Policy application is discovered, what actio may an ins. Co. take

Void the policy if found during the Contestable period or Void the policy, no matter when it is discovered.

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

Waiver of Premium Rider or Term Rider

72. M has an annual life ins. Premium payment due Jan. 1. She died on January 10 without making the premium payment. What action will the insurer take

Deny the claim or Pay face amount minus the past due premium.

87. The option that provides an additional death benefit for a limited amount of time at the lowest possible costs is called a

Family rider; Accidental Death and Dismemberment (AD&D)

59. 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 or P will have to pay income taxes on the amount of premiums waived.

82. What benefit does the Payor clause on a Juveile Life policy provide

Premiums are waived if juvenile becomes disabled or Premiums are waived if payor becomes disabled.

76. Which of the following is considered "automatic" Nonforfeiture Option that most insurers will use

Reduced paid-up; Extended term; 1 year term.

4. An insured is past due on his life ins. Premium, but is still within the Grace Period. What will the beneficiary receive if the insured dies during this Grace period

Refund of all premiums paid; Full face amount minus any past due premiums.

70. Ron turned over all rights in his policy over to an assignee. This is called

an absolute assignment or a collateral assignment.

50. A Waiver of Premium

is mandatory in all term life policies or Waives the premiums when the policyowner becomes totally disabled.

68. Policy dividends for life ins. Are

not legal or not guaranteed.

3. M has an ins. Policy that also has an outstanding policy loan at the time of M's death. The insurer will deduct the outstanding loan balance from the

policy proceeds; cash value

21. A life insurance producer's agency agreement normally authorizes the license to do all of the following except

solicit insurance; issue policies.

75. When does a Guarantee Insurability Rider allow the insured to buy additional coverage

10 year increments or at future dates specified in the contract with no evidence of insurability required.

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

Assignment of ownership; Modify a provision in the insurance contract.

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

Insuring; Reinstatement.

53. Rick owns a $100,000 life ins. Policy with a cash value of $10,000. How much can he borrow up to

The policy's face amount $100,000 or The accumulated cash value ($10,000 less interest).

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

$10000 or $50,000.00.

60. Peggy surrenders a permanent life policy with a cash value of $15,000 and an outstanding policy loan of $5,000. If she chooses the reduced paid-up option, what will be the result

A paid-up term policy purchased with $10,000 or A paid up permanent policy purchased with $10,000.

6. S ha a Whole Life policy with a premium payment due soon. Which provision would keep the policy in force if S does ot make the required payment and the policy has adequate cash value from which the premium payment can be made

Automatic Policy Loan; Grace period.

30. Which of these are NOT an example of a Nonforfeiture option

Cash Surrender; Life Income.

89. Which dividend option allows a policy owner to use his dividends to buy life insurance on a single premium basis

Cash option; Paid-up additions option.

37. 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.

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

Claims are paid in full; or Claims are denied under the Suicide clause of the policy.

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

Concealment or Exclusion.

32. The incontestable clause allows an insurer to

Contest a claim during the contestable period; disallow a change of beneficiary during the Constestable.

69. A life ins. Policy which ensures that the premium will be paid if the insured becomes disabled has what kind of rider attached

Cost of living or Waiver of Premium.

40. Which of these statements about a Guarateed Insurability Option rider is NOT TRUE

Coverage can be added at specific ages or Evidence of insurability is not required when the option is exercised.

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

Coverage can be added at specific ages; Evidence of insurability is required when the option is exercised.

12. 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 misstatement of age is discovered or Insurer may void the policy if a misstatement of age is discovered.

79. What is the Suicide proision designed to do

Decline an applicant who is contemplating suicide or safeguard the insurer from an applicant who is contemplating suicide.

93. How are surrender charges deducted in a life policy iwth a rear ended loaded provision

Deducted from policy cash value or deducted when the policy is discontinued.

19. How are surrender charges deducted in a life policy with a rear-end loaded provision

Deducted from the benefit or Deducted when the policy is discontinued.

84. How are policyowner dividends treated in regards to income tax

Dividends are not taxable or Interest on accumulations is taxed.

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

Double the face amount because death was accidental or the full face amount.

49. P is blinded in an industrial accident. Which provision of his life ins. Policy will pay a stated benefit amount

Entire contract or Accidental Death and Dismemberment provision.

29. 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, transferriing ownership of his policy to his pollicy to his new life. If D dies without making any further changes, to whom will the policy proceeds be paid to

Ex-wife; Current wife.

86. In a Life Insurance contract, an ins. Co's promise to pay stated benefits is called the

Insuring clause; Entire contract.

26. What action can a policyower take if an application for a bank loan requires collateral

Name bank as beneficiary; Assign policy ownership to the bank.

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

Nothing. Claim is denied or $50,000 minus any outstanding policy loans.

13. John has recently died and it was discovered that he was actually ten years older than what was listed on his life ins. Policy. What will the insurer pay his beneficiary

Only the premiums paid into the policy. No death benefit or The amount of ins. That his premiums would have purchased at his correct age.

55. Whose life is covered on a life insurance policy that contains a Payor benefit clause

Parent or Child.

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

Payor clause; Assignment provision.

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

Payor clause; Reinstatement provision.

47. What provision in a life ins. Policy states that the application is considered part of the contract

Policy Exclusions or Entire Contract provision.

67. Which of these is a correct statement

Policy dividends cannot be guaranteed; or Whole life ins. Cannot build cash value.

34. A provision in a life ins. Policy that pays the policyowner an amountthat does not surpass the guaranteed cash value is called the

Policy loan provision or Accelerated Benefits portion.

15. Which of the following describe a participating life ins. Policy

Policyowner are entitled to receie dividends or Policyowners pay assessments for the company losses.

33. Which of these actions could result in a lapsed policy

Premium was not paid by the due date or Premium was not paid during the grace period.

44. Which of the following is NOT guaranteed by a whole life policy

Premiums or policy dividends.

48. Susan owns a life ins. Policy that has accumulated $10,000 in cash value in which she can no longer pay its premiums. If she elects to take the extended term option, which of these actions would she take

Surrenders that $10,000 cash value and purchases an annuity or Uses the $10,000 to buy term insurance of the same face amount as her original policy.

17. The option that provides an additional death benefit for a limited amount of time at the lowest possible cost is called a

Term Rider or Accidental Death and Dismemberment (AD&D).

24. Which of the following permanent life ins. Policy riders add more coverage for a limited amount of time

Term rider; Waiver of premium Rider

45. Which of the following statements is CORRECT about accelerated death benefits

The full face amount is available as an accelerated benefit or Must have a terminal illness to qualify.

18. A life insurance policyownr has just exercised the policy's reduced paidup option. Which of these statements is true

The policy's cash value will stop accumulating; The amount of coverage will be much less than the original coverage.

65. A policyowner with a $100,000 whole life policy has a cash value of $10,000. There is an outstanding loan of $5,000 and a past due premium of $250. If the policyowner chooses the reduced paid-up option and then later dies, what will the beneficiary receive

The reduced paid-up coverage amt. Minus $250 or The reduced paid-up coverage amount minus $5,250.

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

Waiver of Premiium rider or Term rider.

2. What does the ownership clause in a life ins. Policy state

Who the policyowner is and what rights the policyowner is entitled to or Ownership cannot be assigned after the incontestable period.

56. The automatic premium loan provision is NOT used in which of the following policies

Whole life policy or Increasing term policy.

20. A collateral assignment allows a policyowner to assign

a portion of the policy proceeds to the assignee; or the cash value to the assignee

63. A policyowner with an automatic premium loa provision must

agree to forfeit the policy if loa is not repaid or pay back the loan amount to keep the policy's cash value at its maximum.

64. The automatic premium loan provision is designed to

avoid a policy lapse or allow a policyower to request a policy loan.

90. The automatic premium loan provision is designed to

avoid a policy lapse; or allow policyowner to request a policy loan.

77. L takes out a life ins. 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

deny the claim or adjust the death benefit to a reduced amount.

25. An accidental death rider claim is usually paid if the insured

dies instantaneously; dies within 90 days of the accident.

71. When an insurer issues a policy that refuses to cover certain risks, this is referred to as an

elimination or exlusion.

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

type of insurance or beneficiary's age.