LIFE INSURANCE POLICY PROVISIONS

Question 1

What does per capita beneficiary depiction mean?

Answer 1

it means per person / poer head

Question 2

If no beneficiary is listed, policy benefits will be paid to the insured’s ___

Answer 2

estate

Question 3

Which payment mode would be the least expensive over the course of a year?

Answer 3

the annual payment mode

Question 4

What happens to a policy if the premium is not paid during the grace period?

Answer 4

it will lapse for nonpayment of premium

Question 5

___ is the transfer of policy rights to another party

Answer 5

assignment

Question 6

beginning on the policy delivery date, the free look provision must be provided for no less than ___ days.

Answer 6

10

Question 7

A ___ is a trust listed in a person’s will.

Answer 7

testamentary

Question 8

which provision allows aninsurer to charge a service fee for the collection of premium?

Answer 8

payment of premium provision

Question 9

what is the name for an insurer’s consideration to the applicant?

Answer 9

the warranty

Question 10

first-in-line beneficiaries are also known as ___, second-in-line as ___, and third-in-line as ___.

Answer 10

primary, contingent, tertiary

Question 11

who selects how often a policy premium is paid?

Answer 11

the policyowner

Question 12

an insurer must respond to an applicant for reinstatement with ___ day of receiving the paperwork.

Answer 12

45 days

Question 13

T or F: a term to term policy conversion with the same company does not require evidence of insurability

Answer 13

true

Question 14

benefit proceeds left to an insured’s estate will be decided by a ___ court

Answer 14

probate court

Question 15

Does a beneficiary have an owner’s rights?

Answer 15

no

Question 16

which type of policy type allows for cash value loans - term or whole life?

Answer 16

whole life

Question 17

policy loan interest is due each year on the ___ anniversary date

Answer 17

policy anniversary date

Question 18

would it be better to reinstate an existing policy or attempt to purchase a new policy?

Answer 18

reinstate the original policy since premium is based on insured’s age at issuance and may result in lower premiums

Question 18

which beneficiary depiction may not be changed without permission from the beneficiary?

Answer 18

an irrevocable beneficiary depiction

Question 19

to whole is the interest earned on assets retained by an insurer taxed?

Answer 19

to the beneficiary

Question 20

suicide is covered once the policy has been issued for ___ years

Answer 20

2 years

Question 21

a ___ is usually established when benefits are payable to a minor

Answer 21

trust

Question 22

a women listed as a man on an application will probably receive a ___ benefit at death

Answer 22

higher

Question 23

what is the most common life insurance policy exclusion

Answer 23

war

Question 24

what two items constitute an applicant's consideration

Answer 24

application information and initial premium

Question 25

death by suicide is not covered during the first ___ years of policy issue.

Answer 25

2 years

Question 26

do beneficiaries have contractual rights to a contract?

Answer 26

no

Question 27

how long is a grace period?

Answer 27

no less than 31 days

Question 28

which beneficiary designation means per family line or lineage?

Answer 28

the per stirpes beneficiary designation

Question 29

taking a cash value policy loan ___ create a taxable event

Answer 29

does not

Question 30

only an ___ of an ___ is provided the authority to make or waive a policy provision

Answer 30

approved officer of an insurer

Question 31

when must the optional APL provision be selected?

Answer 31

at the time of the application

Question 32

T or F: beneficiary listings may be changed by the insurer using a change of beneficiary forms.

Answer 32

False, the policyowner, not the insurer, may change the beneficiary

Question 33

any policy modifications must be endorsed by the ___ and ___ to the policy

Answer 33

insurer and attached

Question 33

understanding age on a life application will mean a ___ death benefit will be paid

Answer 33

lower death benefit

Question 34

how long does an insurer have to contest the validity of a claim based on false application information?

Answer 34

for 2 years following the issuance of the policy

Question 35

what provision requires an adjustment in benefits if the insured's age has been improperly recorded

Answer 35

the misstatement of age provision

Question 36

within a contract where does an insurer make its promise to pay benefits?

Answer 36

in the insuring clause

Question 37

which type of trust is created during the life of the insured?

Answer 37

an inter vivos trust

Question 38

what right does the APL option provide to the insurer

Answer 38

the right to borrow from the cash value to pay overdue premium

Question 39

if an insured's age is misstated, what will eventually happen to any future claim?

Answer 39

the benefit will be adjusted to reflect the misstated age

Question 40

what is the APL option designed to prevent?

Answer 40

the unintentional lapse of a policy

Question 41

Explain the simultaneous death act (common disaster)

Answer 41

the assumption that the primary beneficiary died prior to the insured when both die in a common accident

Question 42

a fixed interest rate of no more than ___ % may be assessed on a policy loan

Answer 42

8 %

Question 43

T or F: any immediate family member may take a loan out against a person's insurance policy?

Answer 43

false - only the policyowner has the right to take a loan out against a pokicy

Question 44

the transfer of all policy rights to another party is referred to as ___

Answer 44

absolute assignment

Question 45

is interest paid on a policy loan tax-deductable?

Answer 45

no

Question 46

T or F: the entire contract provision is a mandatory provision

Answer 46

true

Question 47

what clause is a summary of the entire contract and is usually found on the first or face page of the contract?

Answer 47

the insuring clause

Question 48

identify the acronym: APL

Answer 48

automatic premium loan

Question 49

___ is the transfer of some, but not all, policy rights to another party

Answer 49

collateral assignment

Question 50

what would a parent use to change ownership of a child's policy

Answer 50

an absolute assignment

Question 51

is a grace period a required provision

Answer 51

yes

Question 52

what is another name for the free-look provision?

Answer 52

the 10-day right to examine

Question 53

A policy is said to be ___ after the contract has been issued for ___ or more years

Answer 53

incontestable after 2 years

Question 54

The maximum loan value is equal to the ___ minus any projected ___

Answer 54

cash value / interest

Question 55

how are monthly premiums generally paid?

Answer 55

by an electronic transfer through a bank

Question 56

when would the APL option be activated?

Answer 56

following the expiration of the grace period

Question 57

T or F: Everyone attempting to reinstate a policy within 3 years of its lapse date will be accepted

Answer 57

false

Question 58

explain the concept of absolute assignment

Answer 58

the transfer of all policy rights to another

Question 59

what is another name for the transfer of ownership

Answer 59

assignment

Question 60

the minimum length of a free-look period is ___ days

Answer 60

10 days

Question 61

what clause allows an insurer to pay a portion of the death benefit to an individual who paid for funeral expenses?

Answer 61

the facility of payment clause

Question 62

is an insured afforded coverage during the grace period?

Answer 62

yes

Question 63

list some examples of policyowner rights

Answer 63

name/change a beneficiary; select premium mode, receive dividends, take loans against the contract, assign benefits

Question 64

a grace period is designed to prevent the ___ lapse of a policy

Answer 64

unintentional lapse

Question 65

what percentage of a premium must be returned to the policyowner if a policy is returned during the free-look period?

Answer 65

100%

Question 66

what type of assignment is used to secure a loan?

Answer 66

a collateral assignment

Question 67

T or F: a whole life to term conversion with the same company does not require evidence of insurability

Answer 67

false, conversion from whole life to term will always require evidence of insurability

Question 68

the ___ war exclusion only excludes benefits if death is the direct result of battle.

Answer 68

results war

Question 69

name some common policy exclusions

Answer 69

war, private aviation, suicide (first 2 years) dangerous hobbies or occupations, and criminal acts

Question 70

if death occurs with an outstanding policy loan, what is subtracted from the death benefit?

Answer 70

the remaining amount of the loan plus any accrued interest

Question 71

what are the 4 common modes of premium payment?

Answer 71

annual, semiannual, quarterly, and monthly

Question 72

define the term consideration

Answer 72

an exchange of values between two parties

Question 73

list two examples of an owner's right

Answer 73

the right to change beneficiary or premium payment mode