MY Ch. 5 Life Insurance Policies Provisions, Options and Riders

Which of these is NOT a true statement of war exclusion?

A. Civil Insurrections apply

B. Prevents an insurer's financial catastrophe

C. Typically applies to declared and undeclared wars

D. War risk is typically uninsurable

A. Civil Insurrections apply

Which of the following is NOT a subject to the promise to pay in an insuring clause?

A. How the premium is calculated

B. Policy provisions

C. Policy conditions

D. Policy exclusions

A. How the premium is calculated

A source of supplemental income for a life insurance policyowner can be derived from the

Cash value

Which benefit is normally payable to a life insurance policyowner when the insured's life expectancy has been severely limited?

A.Reduced paid-up option

B.Accelerated (living) benefit

C.Return of Premium benefit

D. Extended term option

B. Accelerated (living) benefit

Which life insurance policy would be eligible to include an automatic premium loan provision?

Whole Life

A life insurance policy provision that has the ability to reduce the death benefit is called the

accelerated (living) benefit

Which of the following is true regarding a person receiving a waiver of premium benefit?

A.The insured must expect a total recovery within 2 years

B. The insured will not qualify for workers compensation

C. The insured will not qualify for workers compensation

D. The insured must be disabled for a period of time

D. The insured must be disabled for a period of time

Which of the following is NOT a dividend option for a life insurance policy?

A. Elect to take dividends in cash

B. Allow the dividends to accumulate with interest

C. Use the dividends to pay all or part of the next premium due

D. Receiving the entire policy cash value

D. Receiving the entire policy cash value

The absolute assignment of a life insurance policy results in

all incidents of ownership transferred to the assignee

Which of the following is NOT a condition that must be met for an accidental death benefit to be paid?

A. Injury must have been suffered prior to a stated age

B. Accidental bodily injury must have been the cause of death

C. Cause of death must be from a job-related injury

D. Death must occur within a stated number of days after the accident

C. Cause of death must be from a job-related injury

A life insurance policy's waiver of premium rider has the ability to

relieve the insured of premium payments following an initial waiting period after the insured becomes totally disabled

In the event of premium default, which life insurance provision will use the cash value to keep the policy in force?

Automatic premium loan

A policyowner has a life insurance policy where she had listed her age on the application as 5 years younger than her actual age. If she dies and the insurer discovers the misstatement of age, how much will the insurance company pay?

Less than the face amount

The automatic premium loan provision can be accurately described as

Provision that provides a policy loan to pay any premiums by the end of the grace period

Joe is a life insurance policyowner who has failed to pay interest on his policy loan. What will result from this nonpayment?

Loan amount is increased to reflect the amount of interest due

What is the name of the rider that provides an additional purchase option in a life insurance policy?

Guaranteed insurability rider

What is payable to a policyowner if a whole life policy is surrendered prior to its maturity date?

the cash value

What could be the potential result of taking out a cash value loan under a life insurance policy?

Reduces the amount receivable upon surrender of the contract

If an insured dies during the grace period with no premiums paid

Policy's face amount minus any premiums due

How may an insurance company classify an accidental death benefit on a life policy?

as an optional policy rider

Which statement regarding the life insurance premium for a children's rider is true?

A. decreasing premium as each child becomes an adult

B. premium remains the same no matter how many children

C. Increasing premium as additional children are born

D. No premium is normally charged for a children's rider

B. premium remains the same no matter how many children

Which statement regarding the waiver of premium rider is accurate?

A. policy loans are used to keep the policy active

B. cash payment is not directly provided to the policyowner

C. insurance companies are required to offer this to all policyowners

D. premiums are waived in the event of bankruptcy

C. insurance companies are required to offer this to all policyowners

Tim is confined to a nursing home but doesn't have a terminal illness. Which life insurance rider is designed to help pay for this type of expense?

Long-term care benefit rider

Which of these statements regarding the extended term insurance nonforfeiture option in a life policy is accurate?

A. evidence of insurability is required

B. coverage remains until death of the insured

C. the premium to purchase the coverage comes from the policy's cash value

D. Cash value will continue to grow

C. the premium to purchase the coverage comes from the policy's cash value

Which of the following is NOT guaranteed in a whole life policy?

A. settlement options

B. nonforfeiture options

C. dividend scale

D. policy loan values

C. dividend scale

Which benefit supplement added to a life insurance policy insures an entire family?

Family term rider

A life insurance policy that includes a return of premium rider will pay the beneficiary how much upon the insured's death?

Total premiums paid plus the policy face amount

An insured has a $25,000 whole life insurance policy with a $6,000 cash value available. Under the extended term nonforfeiture option, what is the amount of insurance available to the insured?

25,000

Which of these would NOT be a valid reason to add the waiver of premium rider to a life insurance policy?

A. prevents a policy from lapsing in the event of total disability

B. premiums waived by the insurer do not have to be repaid by the policyowner

C. policy's cash value would still increase as policy premiums are being waived

D. it allows a policy loan to cover premium payments if the policyowner becomes totally disabled

D. it allows a policy loan to cover premium payments if the policyowner becomes totally disabled

What is considered to be collateral on a life insurance policy loan>

The policy's cash value

After the extended term life nonforfeiture option is chosen, the available insurance will be

level term for a stated period of time

How long can an insurer legally defer paying the cash value of a surrendered life insurance policy?

6 months

Which life insurance policy provision allows a policyowner to cancel the policy and receive a full refund within a limited time period after policy delivery?

Free-look period

A life insurance policyowner would like a dividend option that results in a limited current outlay of funds. Which dividend option would be chosen?

Reduction of premium payment

A policyowner is permitted to take out a policy loan on a whole life policy at what point?

When the policy has a cash value

What happens to the death benefit of a life insurance policy if the insured elects a partial payment from the accelerated (living) benefit provision?

Reduced

In what was is a life insurance policy affected by an accelerated benefit payment?

decreases the death benefit

Which of these is NOT a common life insurance nonforfeiture option?

A. reduced paid-up insurance

B. extended term option

C. cash surrender option

D. life income annuity

D. life income annuity

What effect can a long-term care benefit rider have on a life insurance policy?

Reduced death benefit

What happens to a life insurance policy when the policy loan balance exceeds the cash value?

Policy will no longer be in force

A life insurance policy that contains an accelerated (living) benefit rider will provide funds if the

insured is expected to be confined to a nursing home for life

How is a collateral assignment used in a life insurance contract?

Transfers specific ownership rights to a creditor

Which life insurance policy option allows the policyowner to have coverage equal to the net death benefit of a lapsed policy?

Extended term nonforfeiture option

Scott has a life insurance policy in which the dividends are left with the insurance company. This particular policy may be paid up when the cash value plus accumulated dividends

equal the net single premium for the same face amount at the insured's attained age

When a lapsed policy's premium has been paid current, it has the potential of being

reinstated

Which of these statements is NOT true regarding a cash value loan against a life insurance policy?

A. interest normally accrues on unpaid balances

B. loan cannot exceed the policy's cash value

C. policy contract terms dictate the interest rate

D. interest payments made by policyowner are deductible

D. interest payments made by policyowner are deductible

Which life insurance clause prohibits an insurance company from questions the validity of the contract after a stated period of time has passed?

incontestable clause

What happens when a policyowner borrows against the cash value of his life insurance policy?

the policy proceeds would be reduced by the outstanding loan balance

A life insurance guaranteed insurability rider gives the insured the right, without proving insurability, to

periodically purchase additional insurance

How is the insured protected if a payor benefit rider is attached to the life insurance policy?

premium payments are waived in the event the premium payor dies or becomes disabled