life provisions, riders, options, and exclusions review

What nonforfeiture option will continue a buildup of cash value

Reduced paid up

What provisions require proof of incurability after a policy has lapsed

Reinstatement

A life insurance policy owner would like to take out a policy loan against the cash value in his whole life policy. The interest rate applied to this loan may vary over time. This is referred to as a ___ rate loan

Variable

A long-term care rider in a life insurance policy pays a daily benefit in the event of..

Inability of the insured to perform more than two activities of daily living (ADLs)

A policy owner may generate taxable income from what dividend option

Accumulation at interest

A whole life insurance policy owner does not have the right to

Not change the grace period. They can change the take out policy loan, assign the policy, and designate a beneficiary

Statements about a guaranteed intrability option Rider

Covers can be added at specific ages, events adventurability is not required when the option is exercised, coverage can be added at specific events such as marriage or having a child

Statements about the waiver of premium provision

Injured must be totally disabled to qualify, a waiting period must pass before becoming eligible for benefits, and waiver premium is available on both permanent and term insurance policies

What provision prevents an insurer from changing the terms on the contract with the policy owner by referring to documents not found within the policy itself

Entire contract provision

You sure it is the past day on his life insurance premium, but is due within the grace period. What will the beneficiary receive if the insured dies during this grace period?

Full face amount minus any past due premiums

What type of life policy contains a monthly mortality charge as well as a self-directed investment choices

Variable universal life

Whose life is covered on a life insurance policy that contains a payor benefit cost

Child

An insurer may normally delay the payment of a cash value loan or surrender value for up to

6 months

A nonforfeiture clause gives the policy owner

Guaranteed values even if the policy has lapsed

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

Cash value provision

A cost of living rider gives the insured

Additional death benefits

Statements concerning settlement options

Rapid depletion of Percy's can be avoided, increase proceeds can be provided through accumulation of interest proceeds can be administered by the insurance company, and some options may be selected by the policy owner

What statement is correct regarding the tax treatment of a lump sum payment paid to a life insurance policies primary beneficiary

All proceeds or income tax free in the year they are received

B owns a whole life policy with a guaranteed interability option that allows him to purchase, without evidence venturability, stated amounts of…

Additional whole life coverage at specified times

A return of premium life policy is

Whole life and increasing term

A ____ rider may be used to include coverage for children under their parents life insurance policy

Term

D was actively serving in the Marines when he was killed in a auto appeal accident while on leave. His $1,000 whole life policy contains a war inclusion cause. How much will D beneficiary’s receive

The full face amount

What is the elements of Life insurance premiums

Interest credit, mortality rate, and insurer’s expense

The common disaster clause provides that if both the insured and the sole named beneficiary were to die in a common accident, what would happen

This clause provides the payment of proceeds to the insured estate if no contingent beneficiary

Any life insurance policy, which provision States who may select policy options, destiny and name a beneficiary, and be the recipient of any financial benefits from the policy

Owners Rights

Settlement options that involve the systematic liquidation of the death proceeds in the event of the insured death

Fixed period, fixed amount, and life income

Dividends paid from a life insurance policy are

Issued by the insurer

When can a policy owner change a revocable beneficiary

Anytime

Jay let her life insurance policy lapse 8 months ago due to non-payment. She can reestablish coverage under what provisions

Reinstatement provision

What premium schedule results in the lowest cost to the policy owner

Annual

And insured inability to perform two or more activities of daily living may trigger which of the life policy rider

Long term care

Us would like to use dividends from her life insurance policy to purchase paid up additions. What would be factors that determine how much coverage can be purchased

The type of life insurance, S’s attained age, and dividend amount used towards purchase

K’s whole life insurance policy lapsed two months ago due to non-payment. She would like to reinstate the policy. All of these statements are correct about policies reinstatement

K must provide evidence of interbility, must reinstate within a stated period, and must pay back interest and premiums

The accelerated death benefit provision in a life insurance policy is also known as

Living benefit

L takes out a life insurance policy and dies 10 years later. During the claim process the insured discovers that l had understated her age on the application. Under the misstatement of age provision, the insurer will

Adjust the death benefit to a reduced amount

And had an annual life insurance premium payment due on January 1st. She died January 10th without making a premium payment. What action will the insurer take

Pay face amount minus the past due premium

B received yearly dividends and interest from a participating life insurance policy. Which of these should b include as gross income for federal income tax purposes

Interest only

The accidental death and dismembership provision in a life insurance policy would pay additional death benefits if the insured

Is blinded in an accident

And has an insurance 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

The consideration clause in a life insurance contract contains what pertinent information

Amount of premium payments and when they are due

He died 5 years after purchasing a life policy. While investigating a 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 because of incontestable clause

Which settlement option pays a stated amount to an annuent, but no residual value to a beneficiary

Life income

What describes a contingent beneficiary

Person designated by the insurance receive policy proceeds in the event that the primary beneficiary dies before the insured

Be recently died and was insured with a life insurance policy for over 5 years. During the claims process, the ensure discovered that be had understated his age by 5 years at the time of the application. In this situation, the insurer will

Pay the amount the premium would have purchased at the correct age

The incontestable clause allows an insurer to

Contest to claim during the contestable period

Who has the right to change a revocable beneficiary

Policyowner

How are policy owner dividends treated in regards to income tax

Interest on accumulations that is taxed

Which type of life insurance beneficiary requires his or her consent when a change of beneficiary is attempted by the policy owner

Irrevocable beneficiary

How would a contingent beneficiary receive the policy proceeds in an accidental death and dismembership policy

If the primary beneficiary dies before the insured

P is blinded in an industrial accident. Which provision of his life insurance policy will pay a stated benefit amount

Accident death and dismembership clause provides death benefit or loss of one or more hands, feet, arms, legs, or loss of sight

Statement on minor beneficiary

Normally, a guardian is required to be appointed in the beneficiary clause of the contract

How are surrender charges deducted on a life policy with a rear end loaded provision

Deducted when the policy is discontinued

Variable whole life insurance can be described as

Both insurance and securities product

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

P will still receive the declared dividends

What benefit does the payor clause on a juvenile life policy provide

Premiums are waived if payor becomes disabled

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

Policy loan provision

A whole life insurance policy owner does not wish to continue making premium payments. What enables the policy owner to sell the policy for more than its cash value

Life settlement contract

When a misrepresentation on a life insurance policy application is discovered, what action may an insurance company take

void the policy only if is discovered during the contestable period and proven to be material

What is the underlying concept regarding level premiums

The early years are charged more than what is needed

In a life insurance policy what feature states that the policy will not cover certain risks

Exclusion

A term life rider offers the insured

Additional life coverage

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 to which he answers no. The policy is then issued with no scuba exclusions. In 2010 p takes up scuba diving and then dies in a scuba related accident in 2011. What will the insurer pay to p beneficiary

$50,000 minus any outstanding policy loans

What statement about accumulated interest earned on dividends from an insurance policy is true

Taxed as ordinary income

What statement regarding the change of beneficiary provision is true

The policy owner can change the beneficiary

Statements regarding a policys grace period

Grace period terms are stated in the policy, policy loans may still be made, and full coverage continues

D is the policy owner and insured for a $50,000 life insurance policy. Beneficiary is these wife. D and his wife divorce and a remarries, transferring ownership of his policy to his new wife. If he dies without making any further changes, to whom will be policy proceeds be paid to

Ex wife

The owns a whole life policy that was purchased 10 years ago. If the premium payment suddenly stopped and they takes no additional action, which nonforfeiture option will the insurer likely proceed with

Extended term

He took out a $50,000 life insurance policy within accidental death and dis membership writer. 5 years later to commit suicide. How much will the insurer pay

$50,000

How do you life insurance companies handle cases where the insured commits suicide within the contract’s stated contestable period

Claims will be denied under the suicide clause of the policy

M purchased an accidental death in this membership policy and named his son as beneficiary. M has the right to change the beneficiary designation at any time. What type of beneficiary is his son

Revocable

And is a student pilot with a large life insurance policy. Which of these features would limit the insurers application in the event and was killed while flying as a student pilot

Exclusion

In a life insurance contract, an insurance companies promise to pay stated benefits is called the

Insuring clause

A policy owner is able to choose the frequency of premium payments through what policy feature

Premium mode

Sam buys a $10,000 whole life policy in 2003 and pays an annual premium of $100. Sam dies 5 years later in 2008 and the insurer pays the beneficiary 10,500. what kind of rider did sam include on the policy

Return of premium rider

What statement is correct about accelerated death benefits

Must have a terminal illness to qualify

The ___ has the right to change a life insurance policys beneficiary

Policyowner

Kate owns a whole life policy. If Kate wants an increasing death benefit to protect against inflation, which dividend option should she choose

Paid up additional insurance

A policy owner would like to change the beneficiary on a life insurance policy and make the change permanent. Which type of designation would fulfill this need

Irrevocable

The ___ is authorized to assign a life insurance policy as collateral for a loan.

Policyowner

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

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

What action is taken when a policy owner uses a life insurance policy as collateral for a bank loan

Collateral assignment

A primary beneficiary has died before the insured in a life insurance policy. A contingent beneficiary is also named in the policy. Which of the following will occur when the insured dies

Proceeds will go to the contingent beneficiary

The agreement in the life insurance contract that states a specific sum of money will be paid to a designated person upon an insurance death is called a

Insuring agreement

Sally has a whole life policy with a premium payment due soon. Which provision would keep the policy enforce if Sally does not make the required payment and the policy has adequate cash value from which the premium payment can be made

Automatic policy loan

The consideration clause in a life insurance policy indicates that a policy owners consideration consists of a completed application and …

The initial premium

The free look provision begins

Upon receipt of the policy by the policy owner

The provision that can be used to put an insurance policy back and forth after it has lapsed due to non-payment is called

Reinstatement

Karen is the insured and Perry is the sole beneficiary on a life insurance policy. Both are involved in a fatal accident where Karen dies before Perry. Under the common disaster provision, which of these statements is true

Proceeds will be payable to Karen's estate if Perry dies within a specified time

On a life insurance policy, who was qualified to change the beneficiary designation

Policyowner

The purpose of the____ Clause is to avoid an unintentional lapse of a life insurance policy

Grace

The advantage of reinstating an original life policy is

The premiums are based on a younger age

Examples of a non forfeiture option

Cash surrender, reduced paid up, and extended term

What action can a policy owner take if an application for a bank loan requires collateral

Assign policy ownership to the bank

Typically a life insurance death benefit is paid by a lump sum payment. A _____ option is a method of disputing a life insurance policy’s death benefit other than a lump sum payment

Settlement

The automatic premium loan provision is designed to

Avoid a policy lapse

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

Accidental death and dismembership rider

What life insurance riders allow the applicant to have excess coverage

Term rider

What does the insuring agreement in a life insurance contract establish

An insurers basic promise

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

Entire contract provision