4. Life Insurance Policies - Life Provisions Flashcards
Which non-forfeiture option offers the highest death benefit?
Extended Term
When is the face amount of a Whole Life policy paid?
When the insured dies or when the policy matures, whichever comes first.
Which clause period allows for the avoidance of an unintentional lapse of life policy.
Grace Period
What constitutes a Waiver Premium provision?
- A waiting period must pass before eligibility
- Is available on both permanent and term insurance policies
- Must be totally disabled to be qualified
If x is insured on a participating life policy, and premiums are waived due to disability what still will be available?
The insured will still receive dividends
An Incontestable Clause allows an insurer to?
Contest a claim during the Contestable Period.
Whose life is covered on a life insurance policy that contains a payor benefit clause?
A child’s
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 a scuba-related accident in 2011. What will the insurer pay to P’s beneficiary?
$50,000 minus any outstanding policy loans
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?
Pay face amount minus the past due premium
What does the Ownership Clause in a Life Insurance Policy state?
Who the policyowner is and what rights the policyowner is entitled to
Variable Whole Life Insurance can be described as…
Both an insurance and securities product
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
What does the insuring agreement of the Life Insurance contract establish?
An insurer’s basic promise
What does the Suicide Provision designed to do?
Safeguarding the insurer from an applicant who is contemplating suicide
What constitutes the Non-Forfeiture Clause?
- Extended Term
- Reduce Paid-Up
- Cash Surrender
The Accidental Death and Dismemberment (AD&D) provision in a life insurance policy would pay additional benefits if the insured:
Is blinded in an accident
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
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?
The full face amount
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:
Adjust the death benefit to a reduced amount
All of these Settlement options involve the systematic liquidation of the death proceeds in the event of the insured’s death, EXCEPT:
Interest Only
The Accelerated Death Benefit provision in a life insurance policy is also known as a(n):
Living Benefit
A Return of Premium Life Insurance Policy is:
Whole life and Increasing Term
Which of these provisions require proof of insurability after a policy has lapsed?
Reinstatement
The following statement is not true about a policy’s Grace Period:
Past due premiums are waived
What characterized Accumulated Interest Earned on dividends from an Insurance Policy?
Taxed as ordinary income
What is not true about a Guaranteed Insurability Option rider?
Evidence of insurability is required when the option is exercised
What benefit does the Payor Clause on a Juvenile Life Policy provide.
Premiums are waived if the payor becomes disabled
What’s an example of a Non-Forfeiture Option?
Reduced Paid-Up Option
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
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
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?
Pay face amount minus the past due amount
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?
Full face amount minus any past due premiums
Which Non-Forfeiture Options continue a build up of cash value?
Reduced Paid-Up
The free-look provision begins when?
Upon the receipt of the policy by the policyowner
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?
20-Pay-Life accumulates cash value faster than Straight Life
K’s whole life insurance policy lapsed two months ago due to nonpayment. She would now like to reinstate the policy. All of these statements are correct about the policy’s reinstatement EXCEPT
K will forfeit the right to use the automatic loan provision upon reinstatement
Who is authorized to assign a Life Insurance policy as collateral for a loan.
Policyowner
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 a scuba-related accident in 2011. What will the insurer pay to P’s beneficiary?
$50,000 minus any outstanding policy loans
