4. Life Insurance Policies - Life Provisions

Question 1

Which non-forfeiture option offers the highest death benefit?

Answer 1

Extended Term

Question 2

When is the face amount of a Whole Life policy paid?

Answer 2

When the insured dies or when the policy matures, whichever comes first.

Question 3

Which clause period allows for the avoidance of an unintentional lapse of life policy.

Answer 3

Grace Period

Question 4

What constitutes a Waiver Premium provision?

Answer 4

1. A waiting period must pass before eligibility
2. Is available on both permanent and term insurance policies
3. Must be totally disabled to be qualified

Question 5

If x is insured on a participating life policy, and premiums are waived due to disability what still will be available?

Answer 5

The insured will still receive dividends

Question 6

An Incontestable Clause allows an insurer to?

Answer 6

Contest a claim during the Contestable Period.

Question 7

Whose life is covered on a life insurance policy that contains a payor benefit clause?

Answer 7

A child’s

Question 8

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?

Answer 8

$50,000 minus any outstanding policy loans

Question 9

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?

Answer 9

Pay face amount minus the past due premium

Question 10

What does the Ownership Clause in a Life Insurance Policy state?

Answer 10

Who the policyowner is and what rights the policyowner is entitled to

Question 11

Variable Whole Life Insurance can be described as…

Answer 11

Both an insurance and securities product

Question 12

How do life insurance companies handle cases where the insured commits suicide within the contract’s stated Contestable period?

Answer 12

Claims are denied under the Suicide clause of the policy

Question 13

What does the insuring agreement of the Life Insurance contract establish?

Answer 13

An insurer’s basic promise

Question 14

What does the Suicide Provision designed to do?

Answer 14

Safeguarding the insurer from an applicant who is contemplating suicide

Question 15

What constitutes the Non-Forfeiture Clause?

Answer 15

1. Extended Term
2. Reduce Paid-Up
3. Cash Surrender

Question 16

The Accidental Death and Dismemberment (AD&D) provision in a life insurance policy would pay additional benefits if the insured:

Answer 16

Is blinded in an accident

Question 17

A provision in a life insurance policy that pays the policyowner an amount that does not surpass the guaranteed cash value is called the:

Answer 17

Policy Loan Provision

Question 18

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?

Answer 18

The full face amount

Question 19

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:

Answer 19

Adjust the death benefit to a reduced amount

Question 20

All of these Settlement options involve the systematic liquidation of the death proceeds in the event of the insured’s death, EXCEPT:

Answer 20

Interest Only

Question 21

The Accelerated Death Benefit provision in a life insurance policy is also known as a(n):

Answer 21

Living Benefit

Question 22

A Return of Premium Life Insurance Policy is:

Answer 22

Whole life and Increasing Term

Question 23

Which of these provisions require proof of insurability after a policy has lapsed?

Answer 23

Reinstatement

Question 24

The following statement is not true about a policy’s Grace Period:

Answer 24

Past due premiums are waived

Question 25

What characterized Accumulated Interest Earned on dividends from an Insurance Policy?

Answer 25

Taxed as ordinary income

Question 26

What is not true about a Guaranteed Insurability Option rider?

Answer 26

Evidence of insurability is required when the option is exercised

Question 27

What benefit does the Payor Clause on a Juvenile Life Policy provide.

Answer 27

Premiums are waived if the payor becomes disabled

Question 28

What’s an example of a Non-Forfeiture Option?

Answer 28

Reduced Paid-Up Option

Question 29

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?

Answer 29

Automatic Policy Loan

Question 30

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?

Answer 30

Claim will be denied

Question 31

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?

Answer 31

Pay face amount minus the past due amount

Question 32

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?

Answer 32

Full face amount minus any past due premiums

Question 33

Which Non-Forfeiture Options continue a build up of cash value?

Answer 33

Reduced Paid-Up

Question 34

The free-look provision begins when?

Answer 34

Upon the receipt of the policy by the policyowner

Question 35

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?

Answer 35

20-Pay-Life accumulates cash value faster than Straight Life

Question 36

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

Answer 36

K will forfeit the right to use the automatic loan provision upon reinstatement

Question 37

Who is authorized to assign a Life Insurance policy as collateral for a loan.

Answer 37

Policyowner

Question 38

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?

Answer 38

$50,000 minus any outstanding policy loans