In many jurisdictions, permanent policies are required to have some cash value by the end of...
The policies
third year
Once a policy has lapsed, the insured usually can reinstate the policy, provided proof of insurability is shown, if...
all back premiums due plus interest have been repaid and less than one year has elapsed
If an insured has an outstanding loan of $5,000 on a policy with a face amount of $25,000, at death the company will...
pay the beneficiary $20,000, after subtracting the amount of the outstanding loan
Why should a policyowner be especially careful when deciding to increase the amount of an outstanding policy loan?
If the outstanding loan balance, plus interest, equals or exceeds the cash value of the policy, the company could cancel the insurance
An insured allows a permanent policy to lapse. Unless otherwise instructed, the insurance company...
will automatically institute the extended term option
Collateral for a policy loan is...
the cash value of the policy itself
Amanda's life insurance policy names her sister Joyce as irrevocable beneficiary of the policy proceeds. This means...
Amanda can borrow against the policy's cash value but only with Joyce's permission
If a policyowner has a $100,000 policy with an accumulated cash value of $6,000, the policyowner can borrow up to...
the entire accumulated cash value of $6,000 less interest for one year
Amounts paid out under the accelerated benefits rider...
are deducted from the policy's death benefit
If Mary has been named as the irrevocable beneficiary of a life insurance policy...
she cannot be removed as beneficiary without her consent
The
extended term non forfeiture option
provides...
paid-up term coverage equal to that of the original policy
The nonforfeiture option that provides the most life insurance protection is the...
extended term option
A lapsed policy may usually be reinstated within...
three years after the policy lapses
When a reduced paid-up policy is purchased...
the amount of protection will not vary during the life of the new policy
The term
"nonforfeiture values"
refers to the fact that...
when a policyowner stops paying premiums on a
permanent policy
, its cash value accumulation or equivalent must be made available to the policyowner
When and to whom are life insurance premiums payable?
Premiums are payable in advance to the company or its authorized representative
Using the policy dividends as a single premium to buy
additional
life insurance is called what?
paid-up additions option
What is a life insurance policy dividend?
The policy's share of the company's excess funds or divisible surplus
The phrase "1980 commissions standard ordinary table" refers to what?
mortality table used by companies to calculate reserve requirements
Factors in computing the premium for a life insurance policy
-Mortality rate
-Investment experience
-operating expenses
Teresa begins receiving monthly checks after her husband's death. A year later Teresa passes away and her daughter receives monthly checks until the proceeds are exhausted. This settlement option is the...
Refund annuity option
Factors that determine the amount of each payment under the
fixed period settlement option
-Length of the fixed period
-Face amount of the policy
-Interest
What is a
postmortem
dividend?
A
dividend earned, but not yet paid, in the year of the insured's death
and
paid with the death benefit
When Sam, a widower, dies, his sons Jack and Mack share a monthly check of $2,000. Mack dies and Jack continues to receive a check for $1,000 until he dies. This life income settlement option is called...
Joint and Survivor life income option
A policy that shares in the company's excess funds or divisible surplus is called what?
Participating policy
A participating policy is likely to have what?
Higher premium than a nonparticipating policy
The premium that reflects the
mortality rates, assumed interest, and the policy's share of the company's operating expenses
is called what?
Gross premium
Portion of the premium that is based only on the mortality rates and assumed interest
Net premium
If a new mode of premium payment calls for
less
frequent payments, the total annual dollar outlay by the policyowner will...
decrease
If the policyowner has chosen the
reduce premium dividend option
, dividends will...
be applied to the premium due
Under the provisions of the
fixed period settlement option
, the principal amount...
gradually decreases to zero
Which of the following riders require the insured being totally and permanently disabled before it becomes effective?
Waiver of premium rider
Money provided under the
automatic premium loan provision
...
is generally not charged interest
Voluntary assignment
of a life policy is often used for what purpose?
Make a gift of the policy
If the insured's age has been
overstated
at the time the policy was purchased, and the error is discovered prior to the death of the insured, the company will...
reduce future premium payments
The policy conditions represent the obligations of...
both the insured and the insurer
If an insured commits suicide within the time specified by the suicide clause, the insurance company may...
-Refuse to pay any death benefit
-Void the policy
-refund to the beneficiary only the amount of premium paid to date
In order to encourage the owner of a
decreasing term rider
to continue the rider for the entire policy period a company might...
Reduce the number of years during which premiums are paid on the rider
If an insured's policy includes the waiver of premium rider, what happens when the age is reached where the rider no longer applies?
The premium for the policy is reduced
If a policy contains an
accidental death benefit
and the insured also has an outstanding policy loan, in the event of accidental death, what is paid out?
Twice the face amount of the policy is paid with a deduction equal to the size of the policy loan
Joan, whose policy contains a
waiver of premium rider
, becomes disabled for two years, during which time the company pays over $400 in premiums. Joan recovers and now must...
begin paying the premiums as they become due
A
Payor rider
is used to keep what type of policy in force?
A juvenile insurance policy
If a policy lapses, the company can do what in regard to the accidental death benefit?
Refuse to reinstate the accidental death benefit
Usually, once a policy has been in force over two years, the company can...
void the policy only for nonpayment of the premium
In which of the following circumstances would the accidental death benefit
not
apply?
Death caused by riot or insurrection
If jose names his estate as the beneficiary of his life insurance policy and dies without a will...
a court will distribute the proceeds strictly according to state
A policyowner allows a policy to lapse and the insurance company converts the policy to the extended term option. Which of these from the original policy automatically carry over into the new policy?
A. Waiver of premium
B. Face value
C. Accidental death
B. Face value
The increasing term rider is usually used to...
guarantee that the beneficiary will receive either the cash values or the amount of premiums paid in addition to the policy death proceeds
When is an agent allowed to make a change to policy wording?
NEVER
The ratio of term to permanent insurance in a decreasing term rider is...
the same ratio permitted for a level term rider
A beneficiary that can be changed is called ...
a revocable beneficiary
If one of the named beneficiaries has died, and the deceased beneficiary's heirs receive a portion of the proceeds of the policy, this is called a ....
per stripes beneficiary designation
If Greg's policy on his own life has a guaranteed insurability rider, it means that he can purchase more insurance...
on his own life at certain specified ages without proof of insurability
The company will normally pay the face amount of the policy to the beneficiary of an insured who commits suicide after the policy has been in effect for how long?
2 years
The
waiver of premium rider
normally expires at what age?
60
Should an insured become totally and permanently disabled two months before the cut-off date for the waiver of premium rider...
the insured remains eligible for all provisions
To waive an insured's premium, most companies require an individual's disability to be...
total and permanent
Any extra premium charged for the waiver of premium rider...
does
not
apply to the policy's cash value
For the insurance company to pay the accidental death benefit, most companies require that the insured die within...
90 days of the accident
As a general rule, most insurance companies will allow the insured to change to another type of insurance policy without a medical examination if...
the new premium is higher than the original
With which policy may a 20-year term rider be combined?
A 30-pay life policy
In determining whether disability is permanent, most companies call for how long of a waiting period?
three-to-six months
An insurance company makes
no attempt
to determine if an assignment is...
valid and legal
The main purpose of the spendthrift clause contained in a settlement option is to prevent the beneficiary from doing what?
-Transferring the proceeds of the policy
-Commuting the proceeds of the policy
-Encumbering the proceeds of the policy
The provision which states that a policy will stay in force a certain period of time after the premium falls due is called...
the
grace period provision
The
disability income rider
usually includes...
the waiver of premium rider
If an insured currently has a policy with a waiver of premium rider and should change to a more hazardous occupation, the insurance company will...
continue the waiver of premium rider
What provides the basis for the benefit amount paid to an insured under a disability income rider?
The face amount of the policy
During its
effective period
the face amount of a
level term rider
...
remains the same
The normal waiting period for benefits under the disability income rider is...
3-to-6 months