Life Policy Riders.

Question 1

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

Answer 1

When the primary beneficiary dies before the insured.

Question 2

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

Answer 2

When a suicide is committed within specified period of time after the policy is purchased (usually 2 years).

Question 3

What happens to a policy’s cash value under an extended term nonforfeiture option?

Answer 3

The cash value is converted to the same face amount as in The whole life policy.

Question 4

What is the purpose of settlement options in life insurance policies?

Answer 4

To determine how the death benefit will be paid to the beneficiary.

Question 5

A policy owner borrowed a portion of cash value from his whole life policy. If the loan is not repaid, how will that affect the death benefit to the beneficiary?

Answer 5

The amount of the loan will be substracted from the death benefit.

Question 6

What dividend option is automatically selected by the company if not chosen by the policy owner?

Answer 6

Paid - up additions.

Question 7

What does the term double indemnity mean?

Answer 7

The insurer will pay a benefit of twice the face amount.

Question 8

What settlement options are available in life insurance policies?

Answer 8

Lump - sum/ cash, fixed amount, life income, interest only.

Question 9

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

Answer 9

Collateral assignment.

Question 10

What dividend option can increase the death benefit of the existing life policy?

Answer 10

Paid - up additions.

Question 11

What life policy rider allows the company to forgo collecting the premium if the insured becomes disabled?

Answer 11

Waiver of premium.

Question 12

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

Answer 12

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

Question 13

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

Answer 13

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

Question 14

What are the most common exclusions in life insurance policies?

Answer 14

War and military service, hazardous occupations, and aviation.

Question 15

What required provision protects against unintentional policy lapse?

Answer 15

Grace period.

Question 16

What nonforfeiture option coverage for the longest period of time?

Answer 16

Reduced paid - up.

Question 17

Who does the common disaster clause protect?

Answer 17

The contingent beneficiary.

Question 18

What provision allows the policy owner to reactivate a lapsed life insurance policy within a specified period of time with proof of insurability?

Answer 18

Reinstatement.

Question 19

What term is used to describe methods of payment of the death benefit to the beneficiary upon the insured’s death?

Answer 19

Settlement options.

Question 20

If a settlement option is not chose. By the policy owner or the beneficiary, what option will be used by the insurer?

Answer 20

Lump - sum payment.

Question 21

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

Answer 21

The dividend is applied to the next year’s premium (it reduces the next year’s premium).

Question 22

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

Answer 22

Entire contract.

Question 23

What beneficiary designation has first claim to the death proceeds of a life insurance policy?

Answer 23

Primary beneficiary.

Question 24

What are policy dividends?

Answer 24

Returned of unused premiums.

Question 25

What are the dividends options in life insurance policies?

Answer 25

Cash, reduced premiums, accumulation at interest, paid - up additions, paid - up option, one - year term, and acceleration of endowment.

Question 26

What are the three nonforfeiture options in life - insurance policies?

Answer 26

Cash surrender, reduced paid - up, and extended term.

Question 27

What type of beneficiary is next in line after the primary beneficiary?

Answer 27

Contingent beneficiary.

Question 28

What is the advantage of reinstating a life insurance policy as opposed to applying for a New one?

Answer 28

Policy premium in a reinstated policy will be set according to the insured’s original age.

Question 29

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

Answer 29

Revocable.

Question 30

What is the name for a life insurance policy rider that provides coverage on the insured’s family members?

Answer 30

Other - insured rider.

Question 31

An applicant for life insurance misstated age on the policy application. How will this affect the death benefit?

Answer 31

The death benefit will be adjusted to the a amount that the insured could obtain for her correct age.

Question 32

Under what nonforfeiture option does the company pay the policy’s surrender value and have no further obligations to the policy owner?

Answer 32

Cash surrender.

Question 33

What happens to the proceeds of a life insurance policy if there is no named beneficiary?

Answer 33

The proceeds are paid to the insured’s estate.

Question 34

What is the purpose of a free - look period?

Answer 34

To allow the insured to returned the policy with a full refund.

Question 35

What nonforfeiture option is automatically selected by the company if not chosen by the policy owner?

Answer 35

Extended term.

Question 36

What is the purpose of the automatic premium loan provision?

Answer 36

To prevent the unintentional lapse of a policy because of nonpayment of the premium.

Question 37

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

Answer 37

Grace period.

Question 38

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

Answer 38

Absolute assignment.

Question 39

An insurer has discovered a representation on a life insurance policy application regarding the insureds age. The insured is 10 years older than he stated on the application. What will the insurer do regarding the death benefit?

Answer 39

Pay a reduced death benefit.

Question 40

Is the beneficiary required to have insurable interest in the insured?

Answer 40

No. Beneficiaries do not have insurable interest in the insured.

Question 41

What life insurance policy provision prevents an insurer from disputing or denying a claim due to misstatements on the application after a certain period of time?

Answer 41

Incontestability.

Question 42

The sole beneficiary of a life insurance policy dies before the insured. If the policyowner doe not amend the beneficiary designation, what will happen to the policy’s death benefit?

Answer 42

It will be paid to the insured’s estate.

Question 43

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

Answer 43

A copy of the original insurance application.

Question 44

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

Answer 44

Policyowner

Question 45

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

Answer 45

Policy owner