Practice exam questions:

paid-addition option

Uses the divided to purchase a smaller amount of the same type of insurance as the original policy.

contingent beneficiary

The individual who can collect the death benefit if the primary beneficiary predeceases the insured.

contingent beneficiary advantage

Determines who receives policy benefits if the primary beneficiary is deceased.

automatic premium loan provision

If activated and the insured dies before the loan is paid back, the balance of the loan will be taken out of the death benefit.

extended term nonforfeiture option

Has the highest amount of insurance protection.

policy assignment

Transfers the right of ownership from the owner to another person.

suicide clause in life insurance

If an insured dies by suicide within one year, the insurer will refund the premium paid.

grace period in insurance

The automatic premium loan provision is activated at the end of the grace period.

accelerated benefit provision

It will decrease the benefits paid to the beneficiary.

accidental death rider

Specifies that a beneficiary receives a double indemnity benefit if death results from an accident.

long-term care rider

Part of the death benefit to cover expenses incurred in a nursing or convalescent home.

responsibilities of long-term care insurer

Establish marketing procedures to assure excessive insurance is not sold or issued.

triple indemnity rider

In case of accidental death due to the insured's fault, the beneficiary will receive $100,000.

Life with Guaranteed Minimum annuity settlement option

Does not guarantee that the entire principal amount will be paid out.

investment risk in a fixed annuity

The insurance company bears all of the investment risks.

installment for a fix annuity settlement option

Payments are regulated for life.

deferred annuity inappropriate use

Creating an estate.

period for receiving income from annuity

Payout period, not liquidation period.

non-qualified retirement plan

Contributions are not tax-exempt.

life expectancy in annuity

The life of the annuitant is taken into account.

penalty of surrendering annuity

Determined by the current interest rate at the time of the surrender.

annuitant death in accumulation stage

The beneficiary will receive the greater of the money paid into an annuity or the cash value.

investment options during free look for variable annuity

Cannot be invested in value funds.

face value of less than $10,000

If returned during the free look, the agreement will be void.

conservation in insurance

A legally acceptable attempt to dissuade a current policy owner from replacing existing life insurance.