Which of the following factors determines the amount of each installment paid in a Life Income Option arrangement?
AProjected income
BRecipient's health and death benefits
CProjected life insurance and health insurance
DRecipient's life expectancy and amo
D
The recipient's life expectancy and the amount of principal determine the amount of each installment paid in the Life Income Option arrangement.
An insured receives an annual life insurance dividend check. What term best describes this arrangement?
AReduction of Premium
BAnnual Dividend Provision
CAccumulation at Interest
DCash option
D
The cash option allows an insurer to send the policyholder an annual, nontaxable dividend check.
A provision in a life insurance policy that provides for the early payment of some portion of the policy face amount should the insured suffer from a terminal illness or injury is called
AViatical Settlement provision.
BAutomatic premium loan provision.
C
D
The accelerated payment can be made in a lump sum or in monthly installments over a special period of time. This provision is given without an increase in premium. Some companies, however, deduct an interest charge from the proceeds paid out to make up
Which of the following applies to the free look privilege?
AIt allows the insured 10 days to pay the initial premium.
BIt can be waived only by the insurance company.
CIt is granted only at the option of the agent.
DIt permits the insured to reject the po
D
A policyowner may return a policy, for any reason, during the free look period and receive a full refund.
Which two terms are associated directly with the premium?
AFixed or variable
BTerm or permanent
CRenewable or convertible
DLevel or flexible
D
A level premium is one in which the premium payment never changes. A flexible premium is found in Universal life policies where the insured changes their premium payment.
Which provision of a life insurance policy states the insurer's duty to pay benefits upon the death of the insured, and to whom the benefits will be paid?
ABeneficiary clause
BConsideration clause
CInsuring clause
DEntire contract clause
C
The insuring clause states that the insurer agrees to provide life insurance for the named insured which will be paid to a designated beneficiary when proof of loss is received by the insurer. It states the party to be covered by the policy and names of
Which is true about the cash surrender nonforfeiture option?
AFunds exceeding the premium paid are taxable as ordinary income.
BAfter the cash surrender, the insured is covered for a grace period of 1 month.
CThe policy remains active for some time after
A
The insurers surrender the policy at its current cash value. Only any excess of value is taxable as income. Once the policyholder opts for cash surrender, the policy is immediately inactive.
M is the owner of a $225,000 life policy with a triple indemnity rider for accidental death. When M is killed in a car accident, it is determined that the accident was his fault and that he was intoxicated at the time of the accident. The triple indemnity
A
The triple indemnity accidental death rider obligates the company to pay three times the face amount of the policy if the insured dies as a result of an accident. The death must be accidental and not contributed to by any other factors and must occur wi
What is the benefit of choosing extended term as a nonforfeiture option?
AIt allows for coverage to continue beyond maturity date
BIt can be converted to a fixed annuity
CIt has the highest amount of insurance protection
DIt matures at age 100
C
Under this option the insurer uses the policy cash value to convert to term insurance for the same face amount as the former permanent policy. The duration of the new term coverage lasts for as long a period as the amount of cash value will purchase.
All of the following are dividend options EXCEPT
AFixed period installments.
BAccumulated at interest
CReduction of premium.
DPaid-up additions.
A
Fixed period installments option is not one of the dividend options.
When a policy is surrendered for its cash value
AIt can be reinstated by paying back all policy loans and premiums
BIt can only be reinstated as a term policy
CCoverage ends and the policy cannot be reinstated.
DCoverage ends but the policy can be reinsta
C
Once the cash surrender value option is selected, the coverage is terminated and the policy cannot be reinstated.
An insured has had a life insurance policy that he purchased 3 years ago when he was 40 years old. He is killed in an automobile accident and it is discovered that he is actually 45 years old, and not 43, as stated on the application. What will the compan
B
The incontestability clause prevents an insurer from denying a claim due to statements in an application after the policy has been in force for 2 years. However, it does not apply to statements relating to age, sex and identity.
Which of the following is true about the premium on the children's rider in a life insurance policy?
AIt decreases when an adopted child is added to the policy.
BIt remains the same no matter how many children are added to the policy.
CIt decreases when t
B
The premium does not change on the inclusion of additional children; it is based on an average number of children.
Z falls from the roof of his house while fixing it and damages his spinal column enough to render him disabled for a year. His insurance policy carries a Disability Income Benefit rider. Which of the following benefits will Z receive?
APayments for life
B
C
The Disability Income Benefit rider waives the policy premiums, just like the Waiver of Premium rider. Unlike the Waiver of Premium rider, it also allows the insured to receive a weekly or monthly income during the disability period.
An insured is involved in an accident. He is informed by his insurance company that he will receive the principal amount due to his accidental death and dismemberment rider on his life insurance policy. For what losses could the insured generally receive
C
The dismemberment portion of the AD&D rider will usually pay the principal (face) amount for loss of two hands, two arms, two legs or the loss of vision in both eyes. The capital amount, usually limited to half the face value, is payable in the event of
An employer provides a group life plan for its employees; it is $50,000 of term to age 65. When one of the employees was hired 10 years ago, he misstated his age and told the employer he was 50, when in fact he was 56 years old. The insured employee died
A
If the applicant has misstated his or her age on the application, the insurer, in the event of a claim, is allowed under this provision to adjust the benefits to an amount that the premium at the correct age would have otherwise purchased. In this case,
A couple owns a life insurance policy with a Children's Term rider. Their daughter is reaching the maximum age of dependent coverage, so she will have to convert to permanent insurance in the near future. Which of the following will she need to provide fo
A
If a Children's Term rider is attached to a life insurance policy, children can be covered under the policy until they reach the maximum age stated in the policy. At that point, they can convert their coverage to a new policy without having to issue pro
Which nonforfeiture option provides coverage for the longest period of time?
APaid-up option
BAccumulated at interest
CReduced paid-up
DExtended term
C
The reduced paid-up nonforfeiture option would provide protection until the insured reaches 100, but the face amount is reduced to what the cash would buy.
Julie pays for her life insurance annually. Until now, she has collected a nontaxable dividend check each year. Julie has decided that she would rather use the dividends to help pay for her next premium. What option would allow her to do this?
ADividend-t
D
The Reduction of Premium option allows the policyholder to apply policy dividends toward the next year's premium. The dividend is subtracted from the premium amount, yielding the new premium due for the next year.
A rider attached to a life insurance policy that provides coverage on the insured's family members is called the
APayor rider.
BOther-insured rider.
CChange of insured rider.
DJuvenile rider.
B
The other-insureds rider is useful in providing insurance for more than one family member. The type of insurance offered by this rider is usually term insurance, with the right to convert to permanent insurance.
What required provision protects against unintentional lapse of the policy?
AReinstatement
BGrace period
CAssignment
DPayment of premiums
B
The grace period is the period of time after the premium due date that the policyowner has to pay the premium before the policy lapses (usually 30 or 31 days). The purpose of the grace period provision is to protect the policyholder against an unintenti
What document must be made part of the insurance policy entire contract?
AShopping Comparison Guide
BOutline of summary
CCopy of the original application
DBuyer's Guide
C
An insurance contract must contain a copy of the original application.
An insured purchases a policy in 2000 and dies in 2005. The insurance company discovers at that time that the insured concealed information during the application process. What can they do?
APay a decreased death benefit
BSue for the right to not pay the
C
The incontestability clause prevents an insurer from denying a claim due to statements in an application after the policy has been in force for 2 years, even on the basis of a material misstatement of facts or concealment of a material fact.
Sam has a life insurance policy from a participating company and receives quarterly dividends. Sam has instructed the company to apply his dividends to the policy to increase the death benefit. The dividend option that Sam has chosen is called
AReduction
B
When this option is selected, the annual dividend acts as a single premium each year to buy additional amounts of insurance, based on the insured's currently attained age.
An insured has chosen joint and 2/3 survivor as the settlement option. What does this mean to the beneficiaries?
AThe beneficiary will receive 2/3 of the lump sum up front, and the remaining 1/3 will be paid over time.
BThe beneficiary will receive 2/3 of
D
When the reduced option is written as "joint and 2/3 survivor," the surviving beneficiary receives 2/3 of what was received when both beneficiaries were alive.
The rider that allows the company to forgo collecting the premium if the insured is disabled is called
AWaiver of cost of insurance.
BPayor benefit.
CWaiver of premium.
DGuaranteed insurability.
C
Waiver of premium rider allows waives the premium if the insured owner has been totally disabled for a predetermined period. The payor benefit provides for an owner other than the insured and the waiver of cost of insurance is found in Universal Life.
An insured owns a $50,000 whole life policy. At age 47, the insured decides to cancel his policy and exercise the extended term option for the policy's cash value, which is currently $20,000. What would be the face amount of the new term policy?
A$20,000
C
The face of the term policy would be the same as the face amount provided under the whole life policy.
Walter purchased a 15-year level term life insurance policy with a face amount of $100,000. The policy contained an accidental death rider, offering a double indemnity benefit. Walter was severely injured in an auto accident, and after 10 weeks of hospita
A
The beneficiary would most likely receive twice the face value of the policy, since his fatal injuries were caused by an accident and he died within the 90-day benefit limit stipulated in most policies.
If a settlement option is not chosen by the beneficiary or policyowner, which option will be used?
ALife income
BFixed period
CFixed amount
DLump sum
D
Upon the death of the insured, or endowment, the contract is designed to pay the proceeds in cash, called a lump sum, unless the recipient chooses an optional mode of settlement.
Bonnie wants to name her husband as the beneficiary of her life policy. She also wishes to retain all of the rights of ownership. Bonnie should have her husband named as the
ASecondary beneficiary.
BTertiary beneficiary.
CIrrevocable beneficiary.
DRevocab
D
If her husband is named as the revocable beneficiary, Bonnie would be the policyowner and could make changes to the contract. Her husband would receive the death benefit.
Which of the following statements best describes the effect the Accelerated Benefit provision would have on the benefits paid to the beneficiary?
AIt will reduce the benefits by 70%.
BIt will increase the benefits paid to the beneficiary.
CIt will decreas
C
Accelerated Benefit provision allows the early payment of some portion of the death benefit if the insured becomes terminally ill or is confined to a long-term care facility. The face amount of insurance is therefore reduced, which will decrease the ben
According to the Entire Contract provision, a policy must contain
AA declarations page with a summary of insureds.
BBuyer's guide to life insurance.
CListing of the insured's former insurer(s) for incontestability provisions.
DA copy of the original appli
D
An insurance contract must contain a copy of the original application.
When an insured dies, who has first claim to the death proceeds of the insured life insurance policy?
AEstate
BPolicyowner
CPrimary beneficiary
DContingent beneficiary
C
The death benefit of a life insurance policy is paid to the primary beneficiary, if living.
All of the following statements concerning Waiver of Premium riders are correct EXCEPT
AOnce activated, the Waiver of Premium will continue until the insured's recovery or the maturity of the policy, whichever occurs first.
BAn insured who has recovered f
B
Premiums which are waived under the rider do not require repayment upon the insured's recovery.
Items stipulated in the contract that the insurer will not provide coverage for are found in the
AExclusions clause.
BInsuring clause.
CBenefit Payment clause.
DConsideration clause.
A
Exclusions are restrictions of coverage as stated in the policy.
Under an extended term insurance policy, the policy cash value is converted to
AA lower face amount than the whole life policy
BA higher face amount than the whole life policy
CThe same face amount as in the whole life policy
DThe face amount equal to the
C
Under this option the insurer uses the policy cash value to convert to term insurance for the same face amount as the former permanent policy.
Which of the following riders provides for a waiver of premium when the policyowner and the insured are NOT the same person?
AConditions for payment
BPayor benefit
CWaiver of premium
DWaiver of the cost of insurance
B
The payor benefit waives the premium of the owner when the owner becomes disabled and is a person other than the insured.
All of the following are TRUE statements regarding the accumulation at interest option EXCEPT
AThe annual dividend is retained by the company.
BThe interest is credited at a rate specified by the policy.
CThe policyholder has the right to withdraw the acc
D
The interest credited under this option is TAXABLE, whether or not the policyowner receives it.
Which of the following is guaranteed to the policyowner through nonforfeiture values?
AThe premiums on their policy will never increase.
BThe cash value in a policy belongs to the insured even if the policy lapses or is surrendered.
CDividends on the poli
B
Because permanent life insurance policies have cash values, there are certain guarantees built into the policy that cannot be forfeited by the policyowner. Nonforfeiture values give the insured the right to the cash value even if the policy lapses or is
A 40-year old man buys a whole life policy and names his wife as his only beneficiary. His wife dies 10 years later. He never remarries and dies at age 61, leaving 2 grown-up children. Assuming he never changed the beneficiary, the policy proceeds will go
C
Because there is no viable beneficiary at the time of death, proceeds are paid to the insured's estate.
The Ownership provision entitles the policyowner to do all of the following EXCEPT
AAssign the policy.
BDesignate a beneficiary.
CSet premium rates.
DReceive a policy loan.
C
The insurer sets premium rates based upon underwriting considerations.
Regarding the free-look provision, the insurance company
AMust issue a free policy for 30/31 days.
BMust issue a free policy for 10 days.
CMust allow the policyowner to return the policy for a full refund.
DCannot charge a premium after 10 days.
C
This provision allows the policyowner a specified number of days from receipt to look over the policy and if dissatisfied for any reason, return it for a full refund of premium. The beginning of this free-look period starts when the policyowner receives
The two types of assignments are
AComplete and partial.
BComplete and proportionate.
CAbsolute and collateral.
DAbsolute and partial.
C
Absolute assigns the entire policy. Collateral assigns a part or all of the benefits.v
All of the following are features and requirements of the Living Needs Rider EXCEPT
ADiagnosis must indicate that death is expected within 3 years.
BIt is usually available at no additional charge.
CThe remainder of the policy proceeds is payable to the b
A
The Living Needs Rider provides for the payment of part of the policy death benefit if the insured is diagnosed with a terminal illness that will result in death within 2 years.
Which type of beneficiary is changeable at any point?
APrimary
BIrrevocable
CRevocable
DContingent
C
Revocable beneficiaries can be changed at any point. Irrevocable beneficiaries must give permission to the policyowner in order for the beneficiary to be changed. The terms "primary" and "contingent" refer to succession of beneficiaries.
An insured receives an annual life insurance dividend check. What term best describes this arrangement?
ACash option
BReduction of Premium
CAnnual Dividend Provision
DAccumulation at Interest
A
The cash option allows an insurer to send the policyholder an annual, nontaxable dividend check.
What document must be made part of the insurance policy entire contract?
ACopy of the original application
BBuyer's Guide
CShopping Comparison Guide
DOutline of summary
A
An insurance contract must contain a copy of the original application.
A couple owns a life insurance policy with a Children's Term rider. Their daughter is reaching the maximum age of dependent coverage, so she will have to convert to permanent insurance in the near future. Which of the following will she need to provide fo
B
If a Children's Term rider is attached to a life insurance policy, children can be covered under the policy until they reach the maximum age stated in the policy. At that point, they can convert their coverage to a new policy without having to issue pro
Which of the following, when attached to a permanent life insurance policy, allows the policyowner to customize the policy to provide an additional amount of temporary insurance on the insured, or allows amounts of temporary insurance to cover other famil
D
Term riders may be used to customize a permanent life insurance policy to meet the needs of the policyowner.
A business owner went to the bank to obtain a loan in order to fund the purchase of a doughnut shop, but the bank needed more in trade than she had expected. Since the business owner has a $250,000 life insurance policy, she decided to use it to secure th
A
The business owner could make a collateral assignment of his or her life insurance policy to the bank.
In a case where the primary beneficiary predeceases the insured, in the event of the insured's death, the death benefit proceeds will be paid to
ASpouse.
BPolicyowner.
CTertiary beneficiary.
DContingent beneficiary.
D
A contingent beneficiary receives the death benefit if the primary beneficiary predeceases the insured. If there are no designated beneficiaries surviving the insured, the benefits are paid to the estate of the insured.
An insured will be allowed to reactivate her lapsed life insurance policy if action is taken within a certain period of time, and proof of insurability is provided. Which policy provision allows this?
AWaiver of premium provision
BIncontestable clause
CGr
D
A lapsed policy may be reinstated within three years by paying back premiums, with interest, and proving insurability.
M is the owner of a $225,000 life policy with a triple indemnity rider for accidental death. When M is killed in a car accident, it is determined that the accident was his fault and that he was intoxicated at the time of the accident. The triple indemnity
B
The triple indemnity accidental death rider obligates the company to pay three times the face amount of the policy if the insured dies as a result of an accident. The death must be accidental and not contributed to by any other factors and must occur wi
A father purchases a life insurance policy on his teenage daughter and adds the Payor Benefit rider. In which of the following scenarios will the rider waive the payment of premium?
AIf the father is disabled for at least a year
BIf the daughter is disabl
D
Payor benefit only pays if the owner, the father in this example, is disabled for at least 6 months.
Unlike the dividend itself, the interest earned on dividends is
ATax deductible.
B40% taxable, similar to a capital gain.
CTaxable.
DNontaxable.
C
Dividends are a return of unused premiums on which the insured has already paid taxes. Any interest earned is taxable as ordinary income.
Which provision of a life insurance policy states the insurer's duty to pay benefits upon the death of the insured, and to whom the benefits will be paid?
AEntire contract clause
BBeneficiary clause
CConsideration clause
DInsuring clause
D
The insuring clause states that the insurer agrees to provide life insurance for the named insured which will be paid to a designated beneficiary when proof of loss is received by the insurer. It states the party to be covered by the policy and names of
What is the term that most accurately describes the provision designed to relieve life insurance premium payment for minors whose parents have died or become disabled?
AWaiver of Premium
BPayor Benefit
CJumping Juvenile
DJuvenile Premium Provision
B
Under the Payor Benefit, if the guardian of a child dies or becomes disabled, the child will be exempt from premium payment until a certain age, usually 21.
The dividend option in which the policyowner uses dividends to purchase a term policy for one year is referred to as the
APaid-up additions.
BOne-year term option.
CPaid-up option.
DAccelerated endowment.
B
The dividend is utilized to purchase one year term insurance.
What required provision protects against unintentional lapse of the policy?
AAssignment
BPayment of premiums
CReinstatement
DGrace period
D
The grace period is the period of time after the premium due date that the policyowner has to pay the premium before the policy lapses (usually 30 or 31 days). The purpose of the grace period provision is to protect the policyholder against an unintenti
Which of the following is NOT typically excluded from life policies?
ADeath due to plane crash for a fare-paying passenger
BSelf-inflicted death
CDeath that occurs while involved in a felony
DDeath due to war or military service
A
Generally, policies do not exclude conditions in which an insured is a fare-paying passenger on a commercial airline.
The life insurance policy clause that prevents an insurance company from denying payment of a death claim after a specified period of time is known as the
AIncontestability clause.
BReinstatement clause.
CInsuring clause.
DMisstatement of Age clause.
A
If an insurer wishes to contest any statements on an application, they must do so within the first two years.
When a whole life policy lapses or is surrendered prior to maturity, the cash value can be used to
APurchase a single premium policy for a reduced face amount.
BPurchase a term rider to attach to the policy.
CPay back all premiums owed plus interest.
DRec
A
When a whole life policy lapses or is surrendered prior to maturity, the cash value can be used by the insurer as a single premium to purchase a completely paid up permanent policy that has a reduced face amount from that of the former policy.
What is the other term for the cash payment settlement option?
APrincipal amount
BFace amount
CProceeds
DLump sum
D
Upon the death of the insured, the contract is designed to pay the proceeds in cash, called a lump sum.
All of the following statements concerning dividends are true EXCEPT
ALower insurance company costs generate higher dividends.
BThey stem from favorable underwriting experience.
CFavorable investment results generate higher dividends.
DDividend amounts ar
D
Dividends cannot be guaranteed.
Under which nonforfeiture option does the company pay the surrender value and have no further obligations to the policyowner?
ACash surrender
BReduced paid-up
CPaid-up options
DExtended term
A
Once the cash surrender value is paid, the contract is over.
Which of the following best describes fixed-period settlement option?
AThe death benefit must be paid out in a lump sum within a certain time period.
BIncome is guaranteed for the life of the beneficiary.
CBoth the principal and interest will be liquidate
C
Under the fixed-period option (also called period certain), a specified period of years is selected, and equal installments are paid to the recipient. Both the principal and interest are liquidated together over the selected period of time.
Which of the following is NOT typically excluded from life policies?
ADeath that occurs while involved in a felony
BDeath due to war or military service
CDeath due to plane crash for a fare-paying passenger
DSelf-inflicted death
C
Generally, policies do not exclude conditions in which an insured is a fare-paying passenger on a commercial airline.
The paid-up addition option uses the dividend
ATo purchase a one-year term insurance in the amount of the cash value.
BTo reduce the next year's premium.
CTo accumulate additional savings for retirement.
DTo purchase a smaller amount of the same type of i
D
With the paid-up additions option, the dividends are used to purchase a single premium, additional permanent policy.
At the time the insured purchased her life insurance policy, she added a rider that will allow her to purchase additional insurance in the future without having to prove insurability. This rider is called
ASupplemental add on.
BCost of living.
CGuaranteed
C
Guaranteed insurability is a rider that is included at the time of application (or can be added at a later date) which allows the insured to increase the amount of insurance without proving evidence of insurability.
Which is true about a spouse term rider?
AThe rider is decreasing term insurance.
BCoverage is allowed up to age 75.
CThe rider is level term insurance.
DCoverage is allowed for an unlimited time.
C
The spouse term rider allows a spouse to be added for coverage. It is available for a limited amount of time, typically expiring at age 65. A spouse term rider (just like any other insured rider) is usually level term insurance.
Which of the following information will be stated in the consideration clause of a life insurance policy?
AThe conditions for insurability
BThe amount of premium payment
CThe parties to the contract
DThe time period allowed for the payment of premium
B
The consideration clause states that the value offered by the insured is the premium and statements made in the application, so it will include the information about the amount and frequency of premium payments.
Which of the following riders provides for a waiver of premium when the policyowner and the insured are NOT the same person?
AWaiver of premium
BWaiver of the cost of insurance
CConditions for payment
DPayor benefit
D
The payor benefit waives the premium of the owner when the owner becomes disabled and is a person other than the insured.
Who controls changes in premium payments, face value, loans, and policy plans?
AInsurer
BBeneficiary
CAgent
DPolicyowner
D
Mandatory provisions give these rights to the policyowner.
An insured will be allowed to reactivate her lapsed life insurance policy if action is taken within a certain period of time, and proof of insurability is provided. Which policy provision allows this?
AGrace period
BReinstatement provision
CWaiver of prem
B
A lapsed policy may be reinstated within three years by paying back premiums, with interest, and proving insurability.
Regarding the free-look provision, the insurance company
AMust allow the policyowner to return the policy for a full refund.
BCannot charge a premium after 10 days.
CMust issue a free policy for 30/31 days.
DMust issue a free policy for 10 days.
A
This provision allows the policyowner a specified number of days from receipt to look over the policy and if dissatisfied for any reason, return it for a full refund of premium. The beginning of this free-look period starts when the policyowner receives
Life income joint and survivor settlement option guarantees
AIncome for 2 or more recipients until they die.
BPayment of interest on death proceeds.
CPayout of the entire death benefit.
DEqual payments to all recipients.
A
The Life Income Joint and Survivor option guarantees an income for two or more recipients for the duration of their lives. Most contracts stipulate that the surviving partner will receive a reduced payment after the other dies, although some will contin
What is the other term for the cash payment settlement option?
AFace amount
BProceeds
CLump sum
DPrincipal amount
C
Upon the death of the insured, the contract is designed to pay the proceeds in cash, called a lump sum.
Cameron is purchasing a permanent life insurance policy with a face value of $25,000. While this is all the insurance that he feels he can afford at this time, he wants to be sure that additional coverage will be available in the future. He should include
D
The guaranteed insurability option allows the insured to purchase specific amounts of additional insurance at specific times without proving insurability.
All of the following are Nonforfeiture options EXCEPT
AReduced paid-up
BInterest only
CCash surrender
DExtended term
B
Nonforfeiture values include cash surrender, extended term and reduced paid-up. Interest only is a settlement option.
If Tom's policy allows him to make periodic additions to the face amount at standard rates, without proving insurability, his policy includes a
AConversion option.
BNonforfeiture option.
CGuaranteed insurability option.
DGuaranteed renewable option.
C
The Guaranteed Insurability option allows the policyowner to purchase specific amounts of additional insurance at specific dates or events, without proving continued insurability. Rates for the additions are based upon attained age.
A life insurance policy does not have a war clause. If the insured is killed during a time of war, what will the beneficiary receive from the policy?
AA refund of premiums
BNothing, since the insured was killed as a result of a war
CThe full death benefit
C
War or Military Service Clause specifically excludes or limits the insurer's liability for losses caused by war or active military service. If a life insurance policy does not have that exclusion, the benefits are paid to the beneficiary, as if the insu
Walter purchased a 15-year level term life insurance policy with a face amount of $100,000. The policy contained an accidental death rider, offering a double indemnity benefit. Walter was severely injured in an auto accident, and after 10 weeks of hospita
D
The beneficiary would most likely receive twice the face value of the policy, since his fatal injuries were caused by an accident and he died within the 90-day benefit limit stipulated in most policies.
When an insured dies, who has first claim to the death proceeds of the insured life insurance policy?
AContingent beneficiary
BEstate
CPolicyowner
DPrimary beneficiary
D
The death benefit of a life insurance policy is paid to the primary beneficiary, if living.
All of the following are TRUE statements regarding the accumulation at interest option EXCEPT
AThe policyholder has the right to withdraw the accumulations at any time.
BThe interest credited under this option is not taxable since it remains inside the in
B
The interest credited under this option is TAXABLE, whether or not the policyowner receives it.
If a life insurance policy has an irrevocable beneficiary designation,
AThe beneficiary can only be changed with written permission of the beneficiary.
BThe beneficiary cannot be changed for at least 2 years.
CThe owner can always change the beneficiary a
A
If a policy has an irrevocable beneficiary designation the beneficiary can only be changed with written permission of the beneficiary.
What is the term that most accurately describes the provision designed to relieve life insurance premium payment for minors whose parents have died or become disabled?
AJumping Juvenile
BJuvenile Premium Provision
CWaiver of Premium
DPayor Benefit
D
Under the Payor Benefit, if the guardian of a child dies or becomes disabled, the child will be exempt from premium payment until a certain age, usually 21.
When may an insurance company use suicide as a defense against paying a death claim?
AAt any time suicide can be proven
BAt no time
CWhen death occurs within a specified period of time after the policy was issued
DOnly when there was a witness to the even
C
An insurance company can deny a claim if the death of the insured was by suicide and occurred within a time specified in the policy.
Children's riders attached to whole life policies are usually issued as what type of insurance?
AIncreasing term
BAdjustable life
CWhole life
DTerm
D
Children's term riders provides term insurance with coverage expiring when the minor reaches a certain age.
A 40-year old man buys a whole life policy and names his wife as his only beneficiary. His wife dies 10 years later. He never remarries and dies at age 61, leaving 2 grown-up children. Assuming he never changed the beneficiary, the policy proceeds will go
B
Because there is no viable beneficiary at the time of death, proceeds are paid to the insured's estate.
What is the advantage of reinstating a policy instead of applying for a new one?
AThe cash values have gained interest while the policy was lapsed
BThe original age is used for premium determination
CProof of insurability is not required
DThe face amount
B
The reinstatement provision allows the policyowner an opportunity to put a lapsed policy back in force, subject to proving continued insurability. If the policyowner elects to reinstate the policy, as opposed to purchasing a new policy, the reinstated p
What is the term that most accurately describes the provision designed to relieve life insurance premium payment for minors whose parents have died or become disabled?
APayor Benefit
BJumping Juvenile
CJuvenile Premium Provision
DWaiver of Premium
A
Under the Payor Benefit, if the guardian of a child dies or becomes disabled, the child will be exempt from premium payment until a certain age, usually 21.
Which of the following named beneficiaries would not be able to receive the death benefit directly from the insurer in the event of the insureds' death?
AFlossie, the present wife of the deceased
BWilma, the former wife of the deceased
CWilliam, Jr., mino
C
Because a minor does not have the legal capacity to release the insurer from further obligation, benefits normally have to be passed through a guardian or trustee.
Which two terms are associated directly with the premium?
ATerm or permanent
BRenewable or convertible
CLevel or flexible
DFixed or variable
C
A level premium is one in which the premium payment never changes. A flexible premium is found in Universal life policies where the insured changes their premium payment.
The paid-up addition option uses the dividend
ATo reduce the next year's premium.
BTo accumulate additional savings for retirement.
CTo purchase a smaller amount of the same type of insurance as the original policy.
DTo purchase a one-year term insurance
C
With the paid-up additions option, the dividends are used to purchase a single premium, additional permanent policy.
If Tom's policy allows him to make periodic additions to the face amount at standard rates, without proving insurability, his policy includes a
AGuaranteed insurability option.
BGuaranteed renewable option.
CConversion option.
DNonforfeiture option.
A
The Guaranteed Insurability option allows the policyowner to purchase specific amounts of additional insurance at specific dates or events, without proving continued insurability. Rates for the additions are based upon attained age.
Which of the following applies to the free look privilege?
AIt can be waived only by the insurance company.
BIt is granted only at the option of the agent.
CIt permits the insured to reject the policy with a full refund.
DIt allows the insured 10 days to
C
A policyowner may return a policy, for any reason, during the free look period and receive a full refund.
Which of the following riders would NOT cause the Death Benefit to increase?
AAccidental Death Rider
BPayor Benefit Rider
CGuaranteed Insurability Rider
DCost of Living Rider
B
Payor Benefit Rider does not increase the Death Benefit; it only pays the premium if the payor is disabled or dies. With Guaranteed Insurability Rider, the policyowner can increase DB at specified ages or events, i.e. marriage or birth of a child; Cost
Which is true about the cash surrender nonforfeiture option?
AAfter the cash surrender, the insured is covered for a grace period of 1 month.
BThe policy remains active for some time after the policyholder opts for cash surrender.
CThe policyholder receiv
D
The insurers surrender the policy at its current cash value. Only any excess of value is taxable as income. Once the policyholder opts for cash surrender, the policy is immediately inactive.