Chapters 5-6 Life Options & Riders

Question 1

options that are defined as return of premium

Answer 1

Dividend Options

Question 2

dividend option that returns the premium as a check each year

Answer 2

Cash

Question 3

dividend option that applies to the premium

Answer 3

Reduction of Premium

Question 4

dividend option that accumulates over and above the cash value and death benefit held in a separate account

Answer 4

Accumulate at Interest

Question 5

dividend option where the company sells a whole life policy in addition to the underlying policy to build up death benefit

Answer 5

Paid-Up Additions

Question 6

instead of buying a permanent paid up policy a person could use their dividend to purchase term protection for one year

Answer 6

One Year Term Option

Question 7

option that allows the insured to use the dividend and apply it to the back end of their premium

Answer 7

Paid-Up Life

Question 8

taking the cash value as a check minus any outstanding loans

Answer 8

Cash (Non-Forfeiture)

Question 9

using the cash value to purchase a new, reduced but paid up policy with no health questions

Answer 9

Reduced Paid-Up (Non-Forfeiture)

Question 10

take the cash value and purchase an amount of term insurance equal to the original policy death benefit for as long as the cash value will pay for

Answer 10

Extended Term (Non-Forfeiture)

Question 11

within 3 years after all past premiums plus interest are paid and proof of insurability provided a policy may be ___________

Answer 11

Reinstated

Question 12

settlement when one lump sum is paid

Answer 12

Cash Settlement

Question 13

when the beneficiary has the company keep the principal amount and pay only the interest

Answer 13

Interest Settlement

Question 14

benefits that can be used while the insured is alive

Answer 14

Living Benefit Options

Question 15

selling the insurance policy to an outside investor

Answer 15

Viatical Settlements

Question 16

allows the insured to collect part of the death benefit prior to death

Answer 16

Accelerated Death Benefit

Question 17

doubles the death benefit if the insured dies in an accident

Answer 17

Double Indemnity Rider

Question 18

allows the insured to purchase additional amounts of insurance at predetermined times without proving insurability

Answer 18

Guaranteed Insurability Rider

Question 19

rider intended to keep pace with inflation and cost of final expenses

Answer 19

Cost of Living Rider

Question 20

term insurance sold as a rider to a permanent policy

Answer 20

Term Rider

Question 21

the insurance company voluntarily waives it right to collect the insured’s premiums due to the insured’s disability

Answer 21

Wavier of Premium Rider

Question 22

disability benefit offered as a rider

Answer 22

Disability Income Rider

Question 23

waiver of premium on the payor if they become disabled or die; typically juvenile policy

Answer 23

Payor Benefit Rider

Question 24

allows the insured to collect all or part of the death benefit prior to death (non-taxable) as a result of Confinement to Nursing home, terminal condition, dread disease, any other reason approved by Commissioner or Director

Answer 24

Accelerated Death Benefit Rider

Question 25

maintain the policy by making the premium payment out of the cash value and applying the deduction as a loan with interest

Answer 25

Automatic Premium Loan Rider