Lesson 5 - Ins Underwriting & Policy Issue Flashcards
All of these Settlement options involve the systematic liquidation of the death proceeds in the event of the insured’s death, EXCEPT:
Fixed Period
Interest Only
Fixed Amount
Life Income
Interest Only
The Interest Only option does NOT involve the systematic liquidation of the death proceeds.
The provision that can be used to put an insurance policy back in force after it has lapsed due to nonpayment is called:
Reinstatement
Grace period
Automatic premium loan
Waiver of premium
Reinstatement
In cases where a policyowner wishes to reinstate a lapsed policy, the reinstatement provision allows the policyowner to do so with some limitations.
Which of these Nonforfeiture Options continue a build-up of cash value?
Waiver of Premium
Extended Term
Reduced Paid-Up
Cash Surrender
Reduced Paid-Up
A Reduced Paid-Up option would provide continuing cash value build-up.
The Accelerated Death Benefit provision in a life insurance policy is also known as a(n):
1035 exchange
Inter vivos gift
Non-forfeiture option
Living Benefit
Living Benefit
The Accelerated Death Benefit provision in a life insurance policy is also known as a “Living Benefit”.
In a life insurance policy, which provision states who may select policy options, designate and name a beneficiary, and be the recipient of any financial benefits from the policy?
Nonforfeiture
Entire Contract
Insuring Clause
Owner’s Rights
Owner’s Rights
Owner’s Rights states who may select policy options, designate and name a beneficiaOwner’s Rightsry, and be the recipient of any financial benefits from the policy.
K owns a Whole Life policy. If K wants an increasing Death Benefit to protect against inflation, which Dividend Option should she chose?
Paid-Up Additional Insurance
Cash Option
Reduced Premiums
Accumulate with Interest
Paid-Up Additional Insurance
In this situation, Paid-Up Option should be selected.
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?
Refund of all premiums paid, plus interest
Refund of all premiums paid
Full face amount minus any past due premiums
Full face amount
Full face amount minus any past due premiums
If an insured dies during the Grace Period of a life insurance policy before paying the past due premium, the beneficiary will receive the face amount of the policy less any past due premiums.
B owns a Whole Life policy with a guaranteed insurability option that allows him to purchase, without evidence of insurability, stated amounts of
additional Term Life coverage at any time
additional Term Life coverage at specified intervals
additional Whole Life coverage at any time
additional Whole Life coverage at specified times
additional Whole Life coverage at specified times
A guaranteed insurability option in a Whole Life Policy permits the policyowner to purchase, without evidence of insurability, stated amounts of Whole Life insurance at specified times.
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:
pay the death benefit in full
adjust the death benefit to an increased amount
adjust the death benefit to a reduced amount
deny the claim
adjust the death benefit to a reduced amount
In this situation, the Misstatement of Age provision in the policy specifies that the insurance proceeds will be adjusted to a reduced amount.
What action can a policyowner take if an application for a bank loan requires collateral?
Utilize accelerated benefits provision
Borrow against policy cash value and use as a down payment
Assign policy ownership to the bank
Name bank as beneficiary
Assign policy ownership to the bank
A policyowner may assign ownership of the policy to a bank as collateral.
Which of the following statements is CORRECT about accelerated death benefits?
The full face amount is available as an accelerated benefit
Those on Social Security disability automatically qualify for this benefit
This provision is usually provided with an increase in premium
Must have a terminal illness to qualify
Must have a terminal illness to qualify
Accelerated death benefits provide for the early payment of some portion of the policy face amount should the insured suffer from a terminal illness or injury.
B receives yearly dividends and interest from a participating life insurance policy. Which of these should B include as gross income for federal income tax purposes?
Interest and dividends
Interest only
Dividends only
Neither interest nor dividends are taxable
Interest only
Some life insurance policies (known as participating policies) pay dividends to their policyholders. Dividends are generally not taxed as income to the policyowner. However interest is taxable as income for federal income tax purposes.
The has the right to change a life insurance policy’s beneficiary.
insurer
insured
policyowner
beneficiary
policyowner
The policyowner has the right to change a life insurance policy’s beneficiary.
B recently died and was insured with a life insurance policy for over five years. During the claims process, the insurer discovered that B had understated his age by 5 years at the time of application. In this situation, the insurer will
pay the amount of premiums paid plus interest
pay the amount that the premium would have purchased at the correct age
pay half of the face amount
pay the full face amount
pay the amount that the premium would have purchased at the correct age
The Misstatement of Age provision states an adjustment be made in the amount of insurance if the age of the insured is misstated.
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
Modify a provision in the insurance contract
Changing contract provisions is not a policyowner right.
