Life Insurance Policy Provisions, Options, and Riders – Flashcards
Unlock all answers in this set
Unlock answersquestion
If the beneficiary's main objective for the death benefit proceeds is estate conservation, they would most likely select which settlement option upon death of the insured: A. Cash B. Fixed amount C. Interest D. Fixed period
answer
Interest
question
A life insurance policy becomes incontestable after how long for non-fraudulent misstatements: A. A policy is never contestable for non-fraudulent misstatements B. 3 years C. 1 year D. 2 years
answer
2 years
question
If the beneficiary would like to receive the death benefit in one lump sum, they should select the following settlement option: A. Cash payment B. Extended term C. Interest only D. Life income
answer
Cash payment
question
Which of the following dividend options, when elected, would cause the insurer to send the insured a check: A. Extended term B. Reduced paid-up C. Cash payment D. Paid up additions
answer
Cash payment
question
Timmy has a life insurance policy w/ a $200,000 death benefit w/ a cost of living rider. If the consumer price index increases 3%, how much additional coverage can Timmy purchase: A. $600 B. $6,000 C. $3,000 D. $300
answer
$6,000
question
A life insurance dividend option that would result in cash value that is in excess of that guaranteed in the policy is: A. Apply to premium when due B. Reduced paid-up C. Paid-up additions D. Interest
answer
Paid-up additions
question
Which statement about the Reinstatement Provision is true: A. It requires the policyholder to pay, w/ interest, all premiums that are in arrears in order for the policy to be reinstated B. It permits reinstatement w/in 10 years after a policy has lapsed C. It guarantees the reinstatement of a policy that has been surrendered for cash D. It provides for reinstatement of a policy regardless of the insured's health
answer
It requires the policyholder to pay, w/ interest, all premiums that are in arrears in order for the policy to be reinstated
question
Dividend projections may be included in a proposal for life insurance when which of the following is true: A. The projected amounts are calculated on the basis of the Commissioner's Standard Ordinary Mortality Tables B. The applicant has requested that they be included C. There is a clear statement that payment of future dividends is not guaranteed D. The projected amounts don't exceed the dividends previously paid by the same insurance company
answer
There is a clear statement that payment of future dividends is not guaranteed
question
When the primary beneficiary predeceases the insured, the proceeds are paid to the: A. Alternate beneficiary B. Collateral beneficiary C. Contingent beneficiary D. Tertiary beneficiary
answer
Contingent beneficiary
question
If an insured w/ a participating whole life policy elects the 1 year term dividend option, the amount of term life insurance purchased by the dividend will equal: A. The annual premium due B. The death benefit C. All premiums paid to date D. The cash value
answer
The death benefits
question
Extended term is exercised through which of the following whole life provisions: A. Settlement B. Nonforfeiture C. Loan D. Assignment
answer
Nonforfeiture
question
If the insured's age was overstated at the time a life insurance policy was purchased and the error is discovered upon the death of the insured, the insurance company will: A. Refund the overcharge in premiums to the beneficiary B. Be prevented from taking any action according to the provisions of the Incontestability clause C. Void the policy D. Provide the additional insurance in the amount that has been purchased by the additional premium
answer
Provide the additional insurance in the amount that has been purchased by the additional premium
question
Which of the following is a non-forfeiture option that provides continuing cash-value build up: A. Deferred Annuity B. Reduced Paid-Up C. Cash Surrender D. Extended Term
answer
Reduced Paid-Up
question
Which settlement option might provide payments that exceed the proceeds of the policy and the interest earned: A. Life Annuity B. Interest Only C. Fixed Amount D. Fixed Period
answer
Life Annuity
question
Which of the following dividend options would be taxable: A. One-year term B. Cash C. Reduction of premium payments D. Interest
answer
Interest
question
Which of the following best describes the Waiver of Premium rider: A. Rider that can be added to any policy that will pay the insured's premium after a waiting period if the insured becomes totally disabled B. A non-forfeiture option that will provide the insured w/ term life insurance for a limited period of time if their original policy lapses C. Rider that can only be added to a cash value life insurance policy which creates a loan against the cash value in order to pay the premium for the insured D. Rider that can only be added to a cash value life insurance policy that will pay the insured's premium if they become totally disabled
answer
Rider that can be added to any policy that will pay the insured's premium after a waiting period if the insured becomes totally disabled
question
All of the following are true regarding an individual life insurance grace period, EXCEPT: A. It's usually 30 days on individual life policies B. Death during the grace period is covered C. First policy provision to apply if the insured does not pay their premium on time D. The full death benefit is payable
answer
The full death benefit is payable
question
Which individual policy conversion is usually permitted without any evidence of insurability: A. Conversion to a lower premium plan B. Conversion from a Whole Life policy to a Term policy C. Conversion to a larger amount of insurance D. Conversion from a Term policy to a Whole Life policy
answer
Conversion from a Term policy to a Whole Life policy
question
Non-standard language would be used in which of the following provisions: A. Misstatement of age B. Uniformity with state statutes C. Reinstatement D. Marriage
answer
Marriage
question
If a life insurance policy does not permit the policyholder to change the beneficiary, the beneficiary is: A. Subsequent B. Guaranteed C. Irrevocable D. Contingent
answer
Irrevocable
question
Beth has a whole life policy with a $200,000 face amount and $50,000 in cash value and wants to take a $30,000 loan to buy a bus. Which of the following is true: A. Loans can't be taken from a whole life policy B. There will be no interest charged C. Only term policies include loan provisions D. Any amount owed will be subtracted from that due at death
answer
Any amount owed will be subtracted from that due at death
question
The provision in a life insurance policy that provides protection against unintentional policy lapse is known as the: A. Automatic Premium Loan Provision B. Waiver of Premium Benefit C. Payor Clause D. Reduction of Premium Option
answer
Automatic Premium Loan Provision
question
Which of the following statements is true about a policy assignment: A. It's valid during the insured's lifetime only because the death benefit is payable to the named beneficiary B. It permits the beneficiary to designate the person or persons to receive the benefits C. It's the same as a beneficiary designation D. It transfers the owner's rights under the policy to the extent expressed in the assignment form
answer
It transfers the owner's rights under the policy to the extent expressed in the assignment form
question
All of the following are true when the beneficiary of a life insurance policy selects the fixed period settlement option, EXCEPT: A. Monthly payments will continue for a fixed period of time, or for life, whichever is longer B. At the end of the fixed period, the proceeds will be exhausted C. Each monthly payment is partly interest and partly principal D. The amount of each monthly payment depends upon the total number of monthly payments remaining
answer
Monthly payments will continue for a fixed period of time, or for life, whichever is longer
question
If the insured understated their age and the error is discovered after the insured's death, the insurance company will: A. Pay the amount the premium would have purchased at the correct age B. Pay the face amount of the policy with a deduction for the amount of the underpayment of premium C. Refuse to pay the death claim D. Refund all past premiums paid with any accumulated interest
answer
Pay the amount the premium would have purchased at the correct age
question
If the primary beneficiary is no longer living when the insured dies, who would receive the death benefit: A. It's forfeited to the insurer B. The contingent beneficiary C. The irrevocable beneficiary D. The revocable beneficiary
answer
The contingent beneficiary
question
The clause in a life insurance policy that states "....a beneficiary cannot assign or encumber the policy proceeds prior to receipt..." is known as the ________ clause: A. Entire contract B. Incontestability C. Spendthrift D. Non-forfeiture
answer
Spendthrift
question
Darla purchased a $100,000 individual W/L policy on 01/01 and paid an initial annual premium of $1,000. After her policy is issued Darla becomes interested in hang gliding and dies in a hang gliding accident on 01/15 of the following year without paying her annual premium. What will the insurer pay to her beneficiary: A. Zero, since she died hang gliding B. $99,000 C. $100,000 D. Zero, since she did not pay her premium
answer
$99,000
question
Which statement about the Misstatement of Age Provision in a life insurance policy is true: A. It is an optional provision B. If the insured's age has been understated, it provides that a death benefit smaller than the face amount of the policy will be payable C. If the insured's age has been overstated, it provides that a premium refund and the face amount of the policy will be payable D. It becomes inoperative after the expiration of the policy's contestable period
answer
If the insured's age has been understated, it provided that a death benefit smaller than the face amount of the policy will be payable
question
An insured has a Whole Life policy w/ a $100,000 face amount and a $40,000 cash value. If the insured's policy lapses, which non-forfeiture option should they select to provide lifetime coverage: A. Cash Surrender B. Reduced Paid-up C. Paid-up Additions D. Extender Term
answer
Reduced Paid-up
question
If a life insurance policy contains a "war clause" and an insured dies as a result of war, the insurer will: A. Pay 50% of the death benefit B. Refund the premiums C. Pay the face amount of the policy D. Pay nothing
answer
Refund the premiums
question
All of the following are true about the Accidental Death Benefit rider, EXCEPT: A. Death must occur w/in a certain period of time after the accident B. Death must be accidental C. Death must be occupational D. Death must be related to an accident that occurs prior to a specified age
answer
Death must be occupational
question
When the insured lists a group of beneficiaries it is known as a: A. Individual designation B. Minor designation C. Class designation D. Trust designation
answer
Class designation
question
Which of the following is true if the insured/owner of the policy doesn't pre-designate a settlement option for the beneficiary prior to death: A. The insurer will keep the death benefit since no settlement option was designated B. The beneficiary may select the settlement option upon death of the insured C. The insurer will automatically pay out a fixed dollar amount to the beneficiary, since it is the automatic option D. The insurer may select the settlement option upon death of the insured
answer
The beneficiary may select the settlement option up death of the insured
question
If a parent purchases life insurance on their child all of the following are true, EXCEPT: A. The parent is the owner of the policy B. The parent is the insured C. The parent is responsible for the premium D. The child is the insured
answer
The parent is the insured
question
Which statement about a typical Suicide Clause in a life insurance policy is true: A. Suicide is excluded for a specific period of years and covered thereafter B. Suicide is covered as long as the policy is in force C. Suicide is excluded as long as the policy is in force D. Suicide is covered for a specific period of years and excluded thereafter
answer
Suicide is excluded for a specific period of years and covered thereafter
question
All of the following are a part of a life insurance policy, EXCEPT the: A. Conditional Receipt B. Insuring Clause C. Copy of the application D. Incontestability Clause
answer
Conditional Receipt
question
A $10,000 life insurance policy w/ a Triple Indemnity Clause has been in force for 3 years. The insured is injured in a train wreck and dies in a hospital 5 months later. The death proceeds payable under the policy would be: A. $30,000 B. $10,000 C. $20,000 D. 0
answer
$10,000
question
If an employee dies w/in the grace period on their group life insurance w/o converting to an individual policy, the insurer will: A. Deny the claim, since the employee had not applied for a converted policy B. Pay the claim, but send a bill to the beneficiary for the overdue premium C. Pay the death benefit, but subtract the overdue premium D. Pay the death benefit in full
answer
Pay the death benefit in full
