LI Provisions, Options And Riders

Question 1

What LI provision states that both the policy and a copy of the application form the contract between the policyowner and the insurer?

Answer 1

Entire contract

Question 2

If a settlement option is not chosen by the policyowner or the beneficiary, what option will be used by the insurer?

Answer 2

Lump sum payment

Question 3

Which of the two types of policy assignments requires transfer of all ownership rights in the policy to a third party?

Answer 3

Absolute assignment

Question 4

What type of assignment is used to secure the payment of a debt with an existing life insurance policy?

Answer 4

Collateral assignment

Question 5

An insurer figures out the insured is actually 10 years older than he stated on the application. What happens to the death benefit?

Answer 5

They will pay a reduced benefit

Question 6

When can an insurance co use suicide as a defense against paying a death claim?

Answer 6

If it happens within 2 years of buying the policy

Question 7

What nonforfeiture option provides coverage for the longest period of time?

Answer 7

Reduced paid-up

Question 8

Sole beneficiary dies before the insured. If the owner doesn’t amend the beneficiary designation, what happens to the policies death benefit?

Answer 8

It’s paid to the insureds estate

Question 9

To meet the requirement of the entire contract policy provision an insurance policy must contain what?

Answer 9

A copy of the original application

Question 10

Who has the right to the cash value of a life insurance policy?

Answer 10

Policyowner

Question 11

What are policy dividends?

Answer 11

Return of unused premiums

Question 12

What provision in a life insurance policy extends the coverage beyond the premium due date?

Answer 12

Grace period

Question 13

You borrow a portion of cash value from your whole life policy. If you don’t repay the loan, how will that affect the death benefit to the beneficiary?

Answer 13

Loan amount subtracted from the death benefit

Question 14

Term used to describe methods of payment of the death benefit to the beneficiary upon the insureds death?

Answer 14

Settlement options

Question 15

What required provision protects against unintentional policy lapse?

Answer 15

Grace period

Question 16

Beneficiary designation that has first claim to the death proceeds of a life insurance policy?

Answer 16

Primary beneficiary

Question 17

Provision that allows the policyowner to reactivate a lapsed life ins policy within a specified period of time without proof of insurability

Answer 17

Reinstatement

Question 18

Life policy rider that allows the company to forgo collecting the premium if the insured becomes disabled

Answer 18

Waiver of premium

Question 19

Purpose of automatic premium loan provision

Answer 19

To prevent the unintentional lapse of a policy bc of nonpayment of the premium

Question 20

In the fixed period settlement option, how will the number of installments for the death benefit proceeds determine the amount of installments?

Answer 20

The longer the period selected, the smaller each installment will be

Question 21

When will a contingent beneficiary receive death benefits from a life insurance policy?

Answer 21

When the primary beneficiary dies before the insured

Question 22

What nonforfeiture option is selected by the company if not chosen by the policyowner?

Answer 22

Extended term

Question 23

Who controls changes in premium payments, face values, and loans in a life insurance policy?

Answer 23

Policyowner

Question 24

With the reduction of premium dividend option, how is the dividend used?

Answer 24

The dividend is applied to the next years premium and reduces it

Question 25

What type of beneficiary can be changed at any point by the policyowner?

Answer 25

Revocable

Question 26

With the interest only settlement option, what happens to the policy’s death benefit?

Answer 26

Policy proceeds are retained by the insurance company, only the interest is paid to the beneficiary

Question 27

What settlement options are available in life insurance policies?

Answer 27

Lump sum/cash, fixed period, fixed amount, life income, interest only

Question 28

3 nonforfeiture options in LI policies

Answer 28

Cash surrender, reduced paid-up, extended term