Policy options & riders – Lesson 5

Question 0

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?

Answer 0

Double the face amount of the policy.

Question 1

An insurer pays a refund from the surplus of profits to the holder of a participating policy. What is this payment?

Answer 1

A policy dividend

Question 2

What are some of the nonforfeiture options?

Answer 2

1. Cash surrender
2. Reduced paid up
3. Extended term

Question 3

Which of the nonforfeiture options will provide the longest period of protection?

Answer 3

Reduced paid up

Question 4

Which of the nonforfeiture options provides the most dollar amount of protection?

Answer 4

Extended term

Question 5

The insurer could use the values from the nonforfeiture options to pay the insurance premium. True or false?

Answer 5

False

Question 6

What type of an insurer issues participating policies?

Answer 6

Mutual company

Question 7

What are dividends?

Answer 7

Regarded by the government as return of excess premium charged the policy owner.

Question 8

Dividends are paid from the mutual insurers surplus and cannot be guaranteed. True or false?

Answer 8

True

Question 9

The dividend option selected by a policyholder, in which a different type of insurance from the original policy purchased, is called:

Answer 9

One year term

Question 10

Who is allowed to select a settlement option?

Answer 10

Policyowner

Question 11

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:

Answer 11

Fixed amount

Question 12

Regarding the accidental death rider; the double benefit will not be paid if there is an outstanding loan against the policy. true or false?

Answer 12

False

Question 13

Regarding the accidental death rider, the insured must die within how many days of suffering the accident?

Answer 13

Within 90 days

Question 14

What provision allows the insured to buy more insurance at stated intervals without proof of insurability?

Answer 14

Guaranteed insurability rider

Question 15

Regarding the waiver of premium rider: does additional premium for the rider affect the cash value of the policy?

Answer 15

No

Question 16

Regarding the waiver of premium rider: what is the normal waiting period?

Answer 16

Six months

Question 17

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?

Answer 17

True

Question 18

Regarding juvenile policy, a policyholder should consider adding what type of rider?

Answer 18

Payor benefit rider

Question 19

A disability income rider provides periodic payments to the insured while suffering a disability due to sickness or accidents. True or false?

Answer 19

True

Question 20

What are the five most common dividend options?

Answer 20

1. Cash
2. Reduce premium
3. Accumulates at interest
4. Paid-up additional insurance
5. One year term

Question 21

Dividends are usually paid annually after a policy has been in force for how long?

Answer 21

A year or two

Question 22

In an Accumulate at interest dividend option, the interest-rate is usually a guaranteed minimum. True or false?

Answer 22

True

Question 23

What is the reason for the one-year term in the dividend option?

Answer 23

To keep the total amount of insurance equal to the face amount when there is a loan against the policy.

Question 24

What are the four settlement options?

Answer 24

1. Interest only option 2. Fixed period Option 3. Fixed amount option 4. Life income option

Question 25

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?

Answer 25

Fixed amount settlement option