Chapter 4: Life insurance Policies - Provisions, options and riders Flashcards
which of these types of policies may NOT have the automatic premium loan provision attached to it?
decreasing term
which statement regarding the misstatement of age provision is considered to be true?
coverage will be adjusted to reflect the insured’s true age if a misstatement of age is discovered
a nonforfeiture clause gives the policyowner
guaranteed values even if the policy has lapsed
which type of life policy contains a monthly mortality charge as well as self-directed investment choices?
Variable universal life
dividends paid from a life insurance policy are
issued by the insurer
what action will an insurer take if an interest payment on a policy loan is not made on time?
Automatically add the amount of interest due to the loan balance
which of the following provisions guarantees that premiums will be waived if a juvenile life policyowner becomes disabled?
Family Maintenance Clause
**Payor clause
Assignment provision
automatic premium loan provision
which of these is NOT considered to be a right given to a policyowner?
surrendering the policy’s cash value
**modify a provision in the insurance contract
assignment of ownership
change the beneficiary, if revocable
The _________ is authorized to assign a life insurance policy as collateral for a loan
policyowner
which life insurance rider typically appears on a juvenile life insurance policy?
Payor benefit rider
B owns a whole life policy with a guaranteed insurability option that allows him to purchase, without evidence of insurability, stated amounts of
additional whole life coverage at specified times
a return of premium life insurance policy is
whole life and increasing term
the consideration clause in a life insurance contract contains what pertinent information?
amount of premium payments and when they are due
which of these statements about guaranteed insurability option rider is NOT TRUE?
evidence of insurability is required when the option is exercised
Which of the following in an example of a nonforfeiture option?
reduced paid up option
how are policyowner dividends treated in regards to income tax?
interest on accumulations is taxed
N is covered by a term life policy and does not make the required premium payment which was due aug 1. N dies Sep 15. What action will the insurer take?
claim will be denied
A ______ rider may be used to include coverage for children under their parents’ life insurance policy
term
When a misrepresentation on a life insurance policy application is discovered, what action may an insurance company take?
Void the policy only if it is discovered during the contestable period and proven to be material
a long-term care rider in a life insurance policy pays a daily benefit in the event of which of the following?
inability of the insured to perform more than 2 activities of daily living (ADL’s)
When does a guaranteed insurability rider allow the insured to buy additional coverage?
at future dates specified in the contract with no evidence of insurability required
The option that provides an additional death benefit for a limited amount of time at the lowest possible cost is called an
accidental death and dismemberment rider (AD&D)
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
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?
Straight life accumulates faster than limited pay life
**20 pay life accumulates cash value faster than straight life
20 pay life and straight life accumulate cash value at the same rate
the agreement in a life insurance contract that states a specific sum of money will be paid to a designated person upon an insured’s death is called a
insuring agreement
a cost of living rider gives the insured
additional death benefits
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 must reinstate within a stated period
K must pay back interest and premiums
**K will forfeit the right to use the automatic loan provision upon reinstatement
In a life insurance contract, an insurance company’s promise to pay stated benefits is called the:
insuring clause
S buys a $10,000 whole life policy in 2003 and pays an annual premium of $100. S dies 5 years later in 2008 and the insurer pays the beneficiary $10,500. What kind of rider did S include on the policy?
Return of premium rider
the advantage or reinstating an original life policy is
the premiums are based on a younger age
additional coverage can be added to a whole life policy by adding an
decreasing term rider
