How do life insurance companies handle cases where the insured commits suicide within the contract's stated Contestable period?
-Claims are denied under the Suicide clause of the policy
-Company pays twice the face amount under the double indemnity clause
claims are denied under the suicide clause of the policy
The agreement in a life insurance contract that states a specific sum of money will be paid to a designated person upon an insured's death is called a(n)
Entire Contract provision
Consideration clause
Insuring agreement
Assignment agreement
the insuring clause or "insuring agreement
What action will an insurer take if an interest payment on a policy loan is not made on time?
-cancel the policy if not paid within the grace period
-automatically add the amount of interest due to the loan balance
-subtract from any dividends owed
-disal
automatically add the amount of interest due to the loan balance
When an insurer issues a policy that refuses to cover certain risks, this is referred to as a(n)
elimination
exclusion
limitation
exception
exclusion
All of these Settlement options involve the systematic liquidation of the death proceeds in the event of the insured's death EXCEPT
Fixed Period
Interest Only
Fixed Amount
Life Income
interest only does not systematically liquidate
The automatic premium loan provision is designed to
-provide a source of revenue to the insurance company
-avoid a policy lapse
-allow a policyowner to request a policy loan
-allow a policyowner to take out additional coverage without evidence of insurabi
avoid a policy lapse
An insured's inability to perform two or more activities of daily living may trigger which type of policy rider?
Waiver of premium
Long term care
Accelerated death benefit
Accidental
long term care
A Return of Premium life insurance policy is
a Nonforfeiture option
Whole life and Increasing term
interest-sensitive
Variable life
whole life and increasing term
In a Life insurance contract, an insurance company's promise to pay stated benefits is called the
Insuring clause
Consideration clause
Entire Contract
Owner's rights
insuring clause
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, transferring ownership of his policy to his new wife. If D dies without making any further changes, to whom will the
ex-wife because though she is not the owner, she still is the beneficiary
Which of these is NOT considered to be a right given to a policyowner?
-Surrendering the policy's cash value
-Modify a provision in the insurance contract
-Assignment of ownership
-Change the beneficiary, if revocable
modify a provision in the insurance contract
When is the face amount of a Whole Life policy paid?
-At the policy's maturity date only
-When the insured dies or at the policy's maturity date, whichever happens first
-Only when the insured dies
-When the policy is surrendered
when the insured dies or at the policy's maturity date, whichever happens first
Whose life is covered on a life insurance policy that contains a payor benefit clause?
Parent
Beneficiary
Child
Spouse
child, this benefit clause only pertains to juveniles
The incontestable clause allows an insurer to
-disallow a change of ownership throughout the Contestable period
-disallow a change of beneficiary during the Contestable period
-contest a claim at anytime if the cause of death was accidental
-contest a cla
contest a claim during the contestable period
S would like to use dividends from her life insurance policy to purchase paid-up additions. All of these would be factors that determine how much coverage can be purchased EXCEPT
-type of life insurance
-S's attained age
-dividend amount used toward purch
beneficiary's age
P is blinded in an industrial accident. Which provision of his life insurance policy will pay a stated benefit amount?
Accelerated Benefits provision
Entire Contract
Accidental Death and Dismemberment clause
Consideration clause
accidental death and dismemberment clause
Which of these statements about a Guaranteed Insurability Option rider is NOT TRUE?
Coverage can be added at specific events such as marriage or having a child
Evidence of insurability is not required when the option is exercised
Evidence of insurability
evidence of insurability is required when the option is exercised
Which of these are NOT an example of a Nonforfeiture option?
Extended Term
Reduced Paid-up
Cash Surrender
Life Income
life income
What provision in a life insurance policy states that the application is considered part of the contract?
Application provision
Policy Exclusions provision
Entire Contract provision
Incontestability provision
entire contract provision
A young, married teacher has two children and owns a Whole Life policy. If the teacher wants an increasing Death Benefit to protect against inflation, the teacher should select which of the following Dividend Options?
Paid-Up Additional Insurance
Accumula
paid-up additional insurance
L takes out a life insurance 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
pay the death benefit in full
adjust
adjust the death benefit to a reduced amount
N is a student pilot with a large life insurance policy. Which of these features would limit the insurer's obligation in the event N was killed while flying as a student pilot?
Misrepresentation
Exclusion
Collateral assignment
Concealment
exclusion
Which of these life insurance riders allows the applicant to have excess coverage?
Automatic Premium Loan rider
Waiver of Premium rider
Guarantee Insurability rider
Term rider
term rider
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?
$100,000
$50,000
Refund of premiums paid plus interest
No claim will be paid
$50,000 even though she died from natural causes
B owns a Whole Life policy with a guaranteed insurability option that allows him to purchase, without evidence of insurability, stated amounts of
additional Term Life coverage at any time
additional Term Life coverage at specified intervals
additional Who
additional whole life coverage at specified times
How are policyowner dividends treated in regards to income tax?
Dividends are not taxable
Interest on accumulations is taxed
Taxed as ordinary income
Taxed as capital gains
interest on accumulations is taxed, anything in excess over total premium payments is taxable income
Which of these types of policies may NOT have the Automatic Premium Loan provision attached to it?
Modified Whole Life
20-Pay Life
Decreasing Term
Endowment
decreasing term
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 which P answers "No". The policy is then issued with no scuba exclusions. In 2010, P takes up scuba diving and dies in
$50,000 less any outstanding policy loans bc the date of death was after the contestable period
A life insurance policy which ensures that the premium will be paid if the insured becomes disabled has what kind of rider attached?
Accelerated Benefits
Waiver of Premium
Cost of Living
Return of Premium
waiver of premium
The provision that can be used to put an insurance policy back in force after it has lapsed due to nonpayment is called
Reinstatement
Grace period
Automatic premium loan
Waiver of premium
reinstatement
Which of the following statements is CORRECT about accelerated death benefits?
The full face amount is available as an accelerated benefit
Those on Social Security disability automatically qualify for this benefit
This provision is usually provided with a
must have a terminal illness to qualify
In a life insurance 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?
Nonforfeiture
Entire Contract
Insuring Clause
Owner's Rights
owner's rights
Which of the following statements about accumulated interest earned on dividends from an insurance policy is TRUE?
It is not taxable
It is tax deductible
It is taxed as capital gains
It is taxed as ordinary income
it is taxed as ordinary income
Which provision prevents an insurer from changing the terms of the contract with the policyowner by referring to documents not found within the policy itself?
Policy Exclusion
Incontestable
Entire Contract Provision
Assignment
entire contract provision
The Consideration clause in a life insurance policy indicates that a policyowner's consideration consists of a completed application and
the initial premium
agreeing to a physical examination
delivery of policy
disclosure of any medical conditions
the initial premium
A provision in a life insurance policy that pays the policyowner an amount that does not surpass the guaranteed cash value is called the
Policy Loan provision
Automatic Premium Loan provision
Accelerated Benefits provision
Consideration clause
policy loan provision
Which statement is TRUE in regards to a policy loan?
Past-due interest payments not paid after 3 months will void the policy
Past-due interest on a policy loan is added to the total debt
Insurance companies can send delinquent interest accounts to a colle
past-due interest on a policy loan is added to the total debt
The Consideration clause in a life insurance contract contains what pertinent information?
Summary of benefits
Offer and acceptance
Entire Contract
Amount of premium payments and when they are due
amount of premium payments and when they are due
All of these statements about the Waiver of Premium provision are correct EXCEPT
A waiting period must pass before becoming eligible for benefits
Waiver of Premium is available on both permanent and term insurance policies
Insured must be eligible for Soc
insured must be eligible for social security disability for claim to be accepted
Which of these actions is taken when a policyowner uses a Life Insurance policy as collateral for a bank loan?
Revocable assignment
Beneficiary change
Irrevocable assignment
Collateral assignment
collateral assignment
In a life insurance policy, which feature states that the policy will not cover certain risks?
Exception
Exclusion
Ejection
Expulsion
exclusion
What is the Suicide provision designed to do?
decline an applicant who is contemplating suicide
safeguard the insurer from an applicant who is contemplating suicide
protect the insurer from ever paying a claim that results from suicide
allows the insurer
safeguard the insurer from an applicant who is contemplating suicide
Which of the following provisions guarantees that premiums will be waived if a Juvenile Life policyowner becomes disabled?
Family Maintenance clause
Payor clause
Assignment provision
Automatic Premium Loan provision
payor clause
Variable Whole Life Insurance can be described as
both an insurance and securities product
an insurance product only
a securities product only
the insurance company assumes the investment risk
both an insurance and securities product
When a misrepresentation on a life insurance policy application is discovered, what action may an insurance company take?
Void the policy if found during the Contestable period
Void the policy, no matter when it is discovered
Void the policy at any time o
void the policy only if it is discovered during the contestable period and proven to be material
The Accelerated Death Benefit provision in a life insurance policy is also known as a(n)
1035 exchange
Inter vivos gift
Non-forfeiture option
Living Benefit
living benefit
Which life insurance rider typically appears on a Juvenile life insurance policy?
Decreasing term rider
Inflation rider
Payor Benefit rider
Waiver of Premium rider
payor benefit rider
P died five years after purchasing a life policy. While investigating the claim, the insurer discovered material misrepresentations made by P during the application process. Which of these actions will the insurer take?
Beneficiary will be denied the clai
beneficiary will be paid the death benefit
Which of these types of life insurance allows the policyowner to have level premiums and to also choose from a selection of investment options?
Modified Whole Life
Variable Life
Universal Life
Adjustable Life
variable life
All of these statements concerning Settlement Options are true EXCEPT
Increased proceeds can be provided through accumulation of interest
Rapid depletion of proceeds can be avoided
Proceeds can be administered by the insurance company
Only the beneficiary
increased proceeds can be provided through accumulation of interest, rapid depletion of proceeds can be avoided, and proceeds can be administered by the insurance company. NOT TRUE that only the beneficiary may select
The option that provides an additional death benefit for a limited amount of time at the lowest possible cost is called a(n)
Term rider
Accidental Death and Dismemberment rider (AD&D)
Family rider
Annuity
accidental death and dismemberment rider - provides additional death benefit for limited period of time and at lowest possible cost
A policy loan is made possible by which of these life insurance policy features?
Extended term provision
Cash value provision
Owner's rights provision
Consideration clause
cash value provision
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
Claim will be partially paid
Claim will be de
claim will be denied, due to policy lapse period
Which type of life policy contains a monthly mortality charge as well as self-directed investment choices?
Joint Life
Adjustable Life
Variable Universal Life
Universal Life
variable universal life - self directed investing always refers to variable
M 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
cash value
estate of the insured
policy proceeds
nonforfeiture value
policy proceeds
S buys a $10,000 Whole Life policy in 2003 and pays an annual premium of $100. S dies 5 years later in 2008 and the insurer pays the beneficiary $10,500. What kind of rider did S include on the policy?
Accelerated death benefit rider
Return of premium rid
return of premium rider bc the premium payments were paid back
Which of these provisions require proof of insurability after a policy has lapsed?
Insuring
Conversion
Reinstatement
Consideration
reinstatement
K pays on a $20,000 20-Year Endowment policy for 10 years and dies from an automobile accident. How much will the insurance company pay the beneficiary?
Return of premiums paid
Cash value plus interest
$20,000 death benefit
Face amount plus interest
$20,000 death benefit - always pay death benefit in event of accidental death
Which of the following Dividend options results in taxable income to the policyowner?
Paid-up Additions
Cash
Accumulation at Interest
Reduced Premium
accumulation at interest
Which of these Nonforfeiture Options continue a build-up of cash value?
Waiver of Premium
Extended Term
Reduced Paid-Up
Cash Surrender
reduced paid-up
A long-term care rider in a life insurance policy pays a daily benefit in the event of which of the following?
Critical illness
Terminal illness
Inability of the insured to perform more than 2 Activities of Daily Living (ADL's)
Inability of the insured to
inability of the insured to perform more than 2 activities of daily living (ADL's)
All of the following statements are true regarding a policy's Grace period EXCEPT
Past due premiums are waived
Policy loans may still be made
Full coverage continues
Grace period terms are stated in the policy
past due premiums are waived
The Accidental Death and Dismemberment (AD&D) provision in a life insurance policy would pay additional benefits if the insured
dies of natural causes
becomes critically ill
becomes chronically ill
is blinded in an accident
is blinded in an accident
An insured is past due on his life insurance 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, plus interest
Refund of all premiums paid
Full face am
full face amount minus any past due premiums
What benefit does the Payor clause on a Juvenile Life policy provide?
Allows payor to assign ownership in the event payor becomes disabled
Allows payor to increase face amount without providing evidence of insurability
Premiums are waived if juvenile beco
premiums are waived if payor becomes disabled
How are surrender charges deducted in a life policy with a rear-end loaded provision?
Deducted from the death benefit
Deducted when the policy is discontinued
Deducted from policy's cash value
Deducted when assigned to another policyowner
deducted when the policy is discontinued
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
Automatic Premium Loan provision
Reinstatement provision
Waiver of Premium
reinstatement provision
When does a Guaranteed Insurability Rider allow the insured to buy additional coverage?
10 year increments
at future dates specified in the contract with proof of insurability required
at future dates specified in the contract with no evidence of insurabi
at future dates specified in the contract with no evidence of insurability required
T took out a $50,000 life insurance policy with an Accidental Death and Dismemberment rider. Five years later, T commits suicide. How much will the insurer pay?
The total premiums paid minus any policy loans
Nothing
$50,000
$100,000
$50,000 bc suicide occurred outside of the suicide clause period (1-2 years), thus paying face amount
S has a Whole Life policy with a premium payment due soon. Which provision would keep the policy in force if S does not make the required payment and the policy has adequate cash value from which the premium payment can be made?
Automatic Policy Loan
Assi
automatic policy loan bc this provision will keep policy in force in lieu of nonpayment
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
Requires that a new policy must be applied for if a misstatement of ag
coverage will be adjusted to reflect the insured's true age if a misstatement of age is discovered
What does the insuring agreement in a Life insurance contract establish?
An insurer's basic promise
The insurance policy's grace period
An insurer's required reserve amount
The obligations of the beneficiary
an insurer's basic promise
What does the ownership clause in a life insurance policy state?
Who the policyowner is and what rights the policyowner is entitled to
Who the beneficiary is and what rights the beneficiary is entitled to
Ownership cannot be assigned after the incontestab
who the policyowner is and what rights the owner is entitled to
Which rider provides coverage for a child under a parent's life insurance policy?
Spouse term rider
Base insured rider
Payor benefit rider
Child term rider
child term rider - not payor bc has no intentions to avoid premium payments if parent becomes disabled
Additional coverage can be added to a Whole Life policy by adding a(n)
payor rider
accelerated benefit rider
decreasing term rider
automatic premium loan rider
decreasing term rider
What action can a policyowner take if an application for a bank loan requires collateral?
Utilize accelerated benefits provision
Borrow against policy cash value and use as a down payment
Assign policy ownership to the bank
Name bank as beneficiary
assign policy ownership to the bank
P is the insured on a participating life policy. Which statement is true if P's premiums are waived due to a disability?
P cannot borrow against the policy's cash value while disabled
P will have to pay income taxes on the amount of premiums waived
P will
p will still receive declared dividends
M had an annual life insurance premium payment due January 1. She died January 10 without making the premium payment. What action will the insurer take?
Collect premium from M's estate
Deny the claim
Pay face amount minus the past due premium
Subtract pas
pay the face amount minus the past due premium
D was actively serving in the Marines when he was killed in an automobile accident while on leave. His $100,000 Whole life policy contains a War Exclusion clause. How much will D's beneficiary's receive?
Refund of premiums paid plus interest
Nothing, due
the full face amount
A potential client, age 40, would like to purchase a Whole Life policy that will accumulate cash value at a faster rate in the early years of the policy. Which of these statements made by the producer would be correct?
Straight life accumulates faster tha
20-pay life accumulates cash value faster than straight line
How do life insurance companies handle cases where the insured commits suicide within the contract's stated Contestable period?
-Claims are denied under the Suicide clause of the policy
-Company pays twice the face amount under the double indemnity clause
claims are denied under the suicide clause of the policy
The agreement in a life insurance contract that states a specific sum of money will be paid to a designated person upon an insured's death is called a(n)
Entire Contract provision
Consideration clause
Insuring agreement
Assignment agreement
the insuring clause or "insuring agreement
What action will an insurer take if an interest payment on a policy loan is not made on time?
-cancel the policy if not paid within the grace period
-automatically add the amount of interest due to the loan balance
-subtract from any dividends owed
-disal
automatically add the amount of interest due to the loan balance
When an insurer issues a policy that refuses to cover certain risks, this is referred to as a(n)
elimination
exclusion
limitation
exception
exclusion
All of these Settlement options involve the systematic liquidation of the death proceeds in the event of the insured's death EXCEPT
Fixed Period
Interest Only
Fixed Amount
Life Income
interest only does not systematically liquidate
The automatic premium loan provision is designed to
-provide a source of revenue to the insurance company
-avoid a policy lapse
-allow a policyowner to request a policy loan
-allow a policyowner to take out additional coverage without evidence of insurabi
avoid a policy lapse
An insured's inability to perform two or more activities of daily living may trigger which type of policy rider?
Waiver of premium
Long term care
Accelerated death benefit
Accidental
long term care
A Return of Premium life insurance policy is
a Nonforfeiture option
Whole life and Increasing term
interest-sensitive
Variable life
whole life and increasing term
In a Life insurance contract, an insurance company's promise to pay stated benefits is called the
Insuring clause
Consideration clause
Entire Contract
Owner's rights
insuring clause
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, transferring ownership of his policy to his new wife. If D dies without making any further changes, to whom will the
ex-wife because though she is not the owner, she still is the beneficiary
Which of these is NOT considered to be a right given to a policyowner?
-Surrendering the policy's cash value
-Modify a provision in the insurance contract
-Assignment of ownership
-Change the beneficiary, if revocable
modify a provision in the insurance contract
When is the face amount of a Whole Life policy paid?
-At the policy's maturity date only
-When the insured dies or at the policy's maturity date, whichever happens first
-Only when the insured dies
-When the policy is surrendered
when the insured dies or at the policy's maturity date, whichever happens first
Whose life is covered on a life insurance policy that contains a payor benefit clause?
Parent
Beneficiary
Child
Spouse
child, this benefit clause only pertains to juveniles
The incontestable clause allows an insurer to
-disallow a change of ownership throughout the Contestable period
-disallow a change of beneficiary during the Contestable period
-contest a claim at anytime if the cause of death was accidental
-contest a cla
contest a claim during the contestable period
S would like to use dividends from her life insurance policy to purchase paid-up additions. All of these would be factors that determine how much coverage can be purchased EXCEPT
-type of life insurance
-S's attained age
-dividend amount used toward purch
beneficiary's age
P is blinded in an industrial accident. Which provision of his life insurance policy will pay a stated benefit amount?
Accelerated Benefits provision
Entire Contract
Accidental Death and Dismemberment clause
Consideration clause
accidental death and dismemberment clause
Which of these statements about a Guaranteed Insurability Option rider is NOT TRUE?
Coverage can be added at specific events such as marriage or having a child
Evidence of insurability is not required when the option is exercised
Evidence of insurability
evidence of insurability is required when the option is exercised
Which of these are NOT an example of a Nonforfeiture option?
Extended Term
Reduced Paid-up
Cash Surrender
Life Income
life income
What provision in a life insurance policy states that the application is considered part of the contract?
Application provision
Policy Exclusions provision
Entire Contract provision
Incontestability provision
entire contract provision
A young, married teacher has two children and owns a Whole Life policy. If the teacher wants an increasing Death Benefit to protect against inflation, the teacher should select which of the following Dividend Options?
Paid-Up Additional Insurance
Accumula
paid-up additional insurance
L takes out a life insurance 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
pay the death benefit in full
adjust
adjust the death benefit to a reduced amount
N is a student pilot with a large life insurance policy. Which of these features would limit the insurer's obligation in the event N was killed while flying as a student pilot?
Misrepresentation
Exclusion
Collateral assignment
Concealment
exclusion
Which of these life insurance riders allows the applicant to have excess coverage?
Automatic Premium Loan rider
Waiver of Premium rider
Guarantee Insurability rider
Term rider
term rider
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?
$100,000
$50,000
Refund of premiums paid plus interest
No claim will be paid
$50,000 even though she died from natural causes
B owns a Whole Life policy with a guaranteed insurability option that allows him to purchase, without evidence of insurability, stated amounts of
additional Term Life coverage at any time
additional Term Life coverage at specified intervals
additional Who
additional whole life coverage at specified times
How are policyowner dividends treated in regards to income tax?
Dividends are not taxable
Interest on accumulations is taxed
Taxed as ordinary income
Taxed as capital gains
interest on accumulations is taxed, anything in excess over total premium payments is taxable income
Which of these types of policies may NOT have the Automatic Premium Loan provision attached to it?
Modified Whole Life
20-Pay Life
Decreasing Term
Endowment
decreasing term
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 which P answers "No". The policy is then issued with no scuba exclusions. In 2010, P takes up scuba diving and dies in
$50,000 less any outstanding policy loans bc the date of death was after the contestable period
A life insurance policy which ensures that the premium will be paid if the insured becomes disabled has what kind of rider attached?
Accelerated Benefits
Waiver of Premium
Cost of Living
Return of Premium
waiver of premium
The provision that can be used to put an insurance policy back in force after it has lapsed due to nonpayment is called
Reinstatement
Grace period
Automatic premium loan
Waiver of premium
reinstatement
Which of the following statements is CORRECT about accelerated death benefits?
The full face amount is available as an accelerated benefit
Those on Social Security disability automatically qualify for this benefit
This provision is usually provided with a
must have a terminal illness to qualify
In a life insurance 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?
Nonforfeiture
Entire Contract
Insuring Clause
Owner's Rights
owner's rights
Which of the following statements about accumulated interest earned on dividends from an insurance policy is TRUE?
It is not taxable
It is tax deductible
It is taxed as capital gains
It is taxed as ordinary income
it is taxed as ordinary income
Which provision prevents an insurer from changing the terms of the contract with the policyowner by referring to documents not found within the policy itself?
Policy Exclusion
Incontestable
Entire Contract Provision
Assignment
entire contract provision
The Consideration clause in a life insurance policy indicates that a policyowner's consideration consists of a completed application and
the initial premium
agreeing to a physical examination
delivery of policy
disclosure of any medical conditions
the initial premium
A provision in a life insurance policy that pays the policyowner an amount that does not surpass the guaranteed cash value is called the
Policy Loan provision
Automatic Premium Loan provision
Accelerated Benefits provision
Consideration clause
policy loan provision
Which statement is TRUE in regards to a policy loan?
Past-due interest payments not paid after 3 months will void the policy
Past-due interest on a policy loan is added to the total debt
Insurance companies can send delinquent interest accounts to a colle
past-due interest on a policy loan is added to the total debt
The Consideration clause in a life insurance contract contains what pertinent information?
Summary of benefits
Offer and acceptance
Entire Contract
Amount of premium payments and when they are due
amount of premium payments and when they are due
All of these statements about the Waiver of Premium provision are correct EXCEPT
A waiting period must pass before becoming eligible for benefits
Waiver of Premium is available on both permanent and term insurance policies
Insured must be eligible for Soc
insured must be eligible for social security disability for claim to be accepted
Which of these actions is taken when a policyowner uses a Life Insurance policy as collateral for a bank loan?
Revocable assignment
Beneficiary change
Irrevocable assignment
Collateral assignment
collateral assignment
In a life insurance policy, which feature states that the policy will not cover certain risks?
Exception
Exclusion
Ejection
Expulsion
exclusion
What is the Suicide provision designed to do?
decline an applicant who is contemplating suicide
safeguard the insurer from an applicant who is contemplating suicide
protect the insurer from ever paying a claim that results from suicide
allows the insurer
safeguard the insurer from an applicant who is contemplating suicide
Which of the following provisions guarantees that premiums will be waived if a Juvenile Life policyowner becomes disabled?
Family Maintenance clause
Payor clause
Assignment provision
Automatic Premium Loan provision
payor clause
Variable Whole Life Insurance can be described as
both an insurance and securities product
an insurance product only
a securities product only
the insurance company assumes the investment risk
both an insurance and securities product
When a misrepresentation on a life insurance policy application is discovered, what action may an insurance company take?
Void the policy if found during the Contestable period
Void the policy, no matter when it is discovered
Void the policy at any time o
void the policy only if it is discovered during the contestable period and proven to be material
The Accelerated Death Benefit provision in a life insurance policy is also known as a(n)
1035 exchange
Inter vivos gift
Non-forfeiture option
Living Benefit
living benefit
Which life insurance rider typically appears on a Juvenile life insurance policy?
Decreasing term rider
Inflation rider
Payor Benefit rider
Waiver of Premium rider
payor benefit rider
P died five years after purchasing a life policy. While investigating the claim, the insurer discovered material misrepresentations made by P during the application process. Which of these actions will the insurer take?
Beneficiary will be denied the clai
beneficiary will be paid the death benefit
Which of these types of life insurance allows the policyowner to have level premiums and to also choose from a selection of investment options?
Modified Whole Life
Variable Life
Universal Life
Adjustable Life
variable life
All of these statements concerning Settlement Options are true EXCEPT
Increased proceeds can be provided through accumulation of interest
Rapid depletion of proceeds can be avoided
Proceeds can be administered by the insurance company
Only the beneficiary
increased proceeds can be provided through accumulation of interest, rapid depletion of proceeds can be avoided, and proceeds can be administered by the insurance company. NOT TRUE that only the beneficiary may select
The option that provides an additional death benefit for a limited amount of time at the lowest possible cost is called a(n)
Term rider
Accidental Death and Dismemberment rider (AD&D)
Family rider
Annuity
accidental death and dismemberment rider - provides additional death benefit for limited period of time and at lowest possible cost
A policy loan is made possible by which of these life insurance policy features?
Extended term provision
Cash value provision
Owner's rights provision
Consideration clause
cash value provision
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
Claim will be partially paid
Claim will be de
claim will be denied, due to policy lapse period
Which type of life policy contains a monthly mortality charge as well as self-directed investment choices?
Joint Life
Adjustable Life
Variable Universal Life
Universal Life
variable universal life - self directed investing always refers to variable
M 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
cash value
estate of the insured
policy proceeds
nonforfeiture value
policy proceeds
S buys a $10,000 Whole Life policy in 2003 and pays an annual premium of $100. S dies 5 years later in 2008 and the insurer pays the beneficiary $10,500. What kind of rider did S include on the policy?
Accelerated death benefit rider
Return of premium rid
return of premium rider bc the premium payments were paid back
Which of these provisions require proof of insurability after a policy has lapsed?
Insuring
Conversion
Reinstatement
Consideration
reinstatement
K pays on a $20,000 20-Year Endowment policy for 10 years and dies from an automobile accident. How much will the insurance company pay the beneficiary?
Return of premiums paid
Cash value plus interest
$20,000 death benefit
Face amount plus interest
$20,000 death benefit - always pay death benefit in event of accidental death
Which of the following Dividend options results in taxable income to the policyowner?
Paid-up Additions
Cash
Accumulation at Interest
Reduced Premium
accumulation at interest
Which of these Nonforfeiture Options continue a build-up of cash value?
Waiver of Premium
Extended Term
Reduced Paid-Up
Cash Surrender
reduced paid-up
A long-term care rider in a life insurance policy pays a daily benefit in the event of which of the following?
Critical illness
Terminal illness
Inability of the insured to perform more than 2 Activities of Daily Living (ADL's)
Inability of the insured to
inability of the insured to perform more than 2 activities of daily living (ADL's)
All of the following statements are true regarding a policy's Grace period EXCEPT
Past due premiums are waived
Policy loans may still be made
Full coverage continues
Grace period terms are stated in the policy
past due premiums are waived
The Accidental Death and Dismemberment (AD&D) provision in a life insurance policy would pay additional benefits if the insured
dies of natural causes
becomes critically ill
becomes chronically ill
is blinded in an accident
is blinded in an accident
An insured is past due on his life insurance 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, plus interest
Refund of all premiums paid
Full face am
full face amount minus any past due premiums
What benefit does the Payor clause on a Juvenile Life policy provide?
Allows payor to assign ownership in the event payor becomes disabled
Allows payor to increase face amount without providing evidence of insurability
Premiums are waived if juvenile beco
premiums are waived if payor becomes disabled
How are surrender charges deducted in a life policy with a rear-end loaded provision?
Deducted from the death benefit
Deducted when the policy is discontinued
Deducted from policy's cash value
Deducted when assigned to another policyowner
deducted when the policy is discontinued
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
Automatic Premium Loan provision
Reinstatement provision
Waiver of Premium
reinstatement provision
When does a Guaranteed Insurability Rider allow the insured to buy additional coverage?
10 year increments
at future dates specified in the contract with proof of insurability required
at future dates specified in the contract with no evidence of insurabi
at future dates specified in the contract with no evidence of insurability required
T took out a $50,000 life insurance policy with an Accidental Death and Dismemberment rider. Five years later, T commits suicide. How much will the insurer pay?
The total premiums paid minus any policy loans
Nothing
$50,000
$100,000
$50,000 bc suicide occurred outside of the suicide clause period (1-2 years), thus paying face amount
S has a Whole Life policy with a premium payment due soon. Which provision would keep the policy in force if S does not make the required payment and the policy has adequate cash value from which the premium payment can be made?
Automatic Policy Loan
Assi
automatic policy loan bc this provision will keep policy in force in lieu of nonpayment
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
Requires that a new policy must be applied for if a misstatement of ag
coverage will be adjusted to reflect the insured's true age if a misstatement of age is discovered
What does the insuring agreement in a Life insurance contract establish?
An insurer's basic promise
The insurance policy's grace period
An insurer's required reserve amount
The obligations of the beneficiary
an insurer's basic promise
What does the ownership clause in a life insurance policy state?
Who the policyowner is and what rights the policyowner is entitled to
Who the beneficiary is and what rights the beneficiary is entitled to
Ownership cannot be assigned after the incontestab
who the policyowner is and what rights the owner is entitled to
Which rider provides coverage for a child under a parent's life insurance policy?
Spouse term rider
Base insured rider
Payor benefit rider
Child term rider
child term rider - not payor bc has no intentions to avoid premium payments if parent becomes disabled
Additional coverage can be added to a Whole Life policy by adding a(n)
payor rider
accelerated benefit rider
decreasing term rider
automatic premium loan rider
decreasing term rider
What action can a policyowner take if an application for a bank loan requires collateral?
Utilize accelerated benefits provision
Borrow against policy cash value and use as a down payment
Assign policy ownership to the bank
Name bank as beneficiary
assign policy ownership to the bank
P is the insured on a participating life policy. Which statement is true if P's premiums are waived due to a disability?
P cannot borrow against the policy's cash value while disabled
P will have to pay income taxes on the amount of premiums waived
P will
p will still receive declared dividends
M had an annual life insurance premium payment due January 1. She died January 10 without making the premium payment. What action will the insurer take?
Collect premium from M's estate
Deny the claim
Pay face amount minus the past due premium
Subtract pas
pay the face amount minus the past due premium
D was actively serving in the Marines when he was killed in an automobile accident while on leave. His $100,000 Whole life policy contains a War Exclusion clause. How much will D's beneficiary's receive?
Refund of premiums paid plus interest
Nothing, due
the full face amount
A potential client, age 40, would like to purchase a Whole Life policy that will accumulate cash value at a faster rate in the early years of the policy. Which of these statements made by the producer would be correct?
Straight life accumulates faster tha
20-pay life accumulates cash value faster than straight line