Policy options & riders – Lesson 5 Flashcards
Accidental death benefits provides for an additional payment when an insured dies within a stated time after and as a result of an accident. In most cases, how much will be insurer pay?
Double the face amount of the policy.
An insurer pays a refund from the surplus of profits to the holder of a participating policy. What is this payment?
A policy dividend
What are some of the nonforfeiture options?
- Cash surrender
- Reduced paid up
- Extended term
Which of the nonforfeiture options will provide the longest period of protection?
Reduced paid up
Which of the nonforfeiture options provides the most dollar amount of protection?
Extended term
The insurer could use the values from the nonforfeiture options to pay the insurance premium. True or false?
False
What type of an insurer issues participating policies?
Mutual company
What are dividends?
Regarded by the government as return of excess premium charged the policy owner.
Dividends are paid from the mutual insurers surplus and cannot be guaranteed. True or false?
True
The dividend option selected by a policyholder, in which a different type of insurance from the original policy purchased, is called:
One year term
Who is allowed to select a settlement option?
Policyowner
Settlement option in which the beneficiary receives a prescribed amount consisting of principal and interest until the entire amount is exhausted is referred to as:
Fixed amount
Regarding the accidental death rider; the double benefit will not be paid if there is an outstanding loan against the policy. true or false?
False
Regarding the accidental death rider, the insured must die within how many days of suffering the accident?
Within 90 days
What provision allows the insured to buy more insurance at stated intervals without proof of insurability?
Guaranteed insurability rider
Regarding the waiver of premium rider: does additional premium for the rider affect the cash value of the policy?
No
Regarding the waiver of premium rider: what is the normal waiting period?
Six months
The cost of living rider might be added to a whole life policy so the whole life policy has a constant face amount of insurance. True or false?
True
Regarding juvenile policy, a policyholder should consider adding what type of rider?
Payor benefit rider
A disability income rider provides periodic payments to the insured while suffering a disability due to sickness or accidents. True or false?
True
What are the five most common dividend options?
- Cash
- Reduce premium
- Accumulates at interest
- Paid-up additional insurance
- One year term
Dividends are usually paid annually after a policy has been in force for how long?
A year or two
In an Accumulate at interest dividend option, the interest-rate is usually a guaranteed minimum. True or false?
True
What is the reason for the one-year term in the dividend option?
To keep the total amount of insurance equal to the face amount when there is a loan against the policy.
What are the four settlement options?
- Interest only option
- Fixed period Option
- Fixed amount option
- Life income option
The death benefit is paid to the beneficiary in a series of fixed amount installments until the proceeds plus interests are exhausted is which of the four settlement options?
Fixed amount settlement option
