Policy, Provisions, Options, & Riders Flashcards
Mike and Ike 08 30 year old identical twins. Both are in excellent Health. He’s brother personal life policy that has a $750 annual premium. Mike bars it’s in your renewable term policy. And I purchase a whole life policy. All of the following statements are true except
Mike has the option of using his cash value to purchase a reduced amount of paid up whole life insurance
A life insurance rider that allows an individual to purchase insurance as they grow older, regardless of insurability is called
Guaranteed Insurability rider
An error was made on Mary’s life insurance application. Which of the following areas do errors commonly occur on applications for which the incontestable clause does NOT apply
Age
A policy owner may exercise which of these dividends options that uses the dividend to pay all or part of the next premium due?
Reduction of premium dividend option
When does a life insurance policy waiver of premium takes effect
Insured becomes totally disable
All of these are coming exclusions to the life insurance policy except
Accidental death
In a life insurance policy, the entire contract consist of
Policies and attached application
A whole life policy option where extended term insurance is selected is called
Non-forfeiture option
If an insured dies doing the grace period with no premiums paid
The policy would be payable, minus the premium amount
What is the name of the provision which states a copy of the application must be attached to the policy when issue
Entire contract
A life insurance policy normally contains a provision that restrict coverage in the event of a death other all of the following situations except
Fare paying passenger
Ron has a life insurance policy with a face value of $100,000 at a cost of a living rider. At the consumer price index has gone up 4%, how much may Ron increase the face value of the policy?
4000
 Loans obtain by a policy owner against the cash value of a life insurance policy
Would not be treated as a taxable income
A provision that allows a policy owner to temporary give up ownership rights to secure a loan is called
Collateral assignment
James is the insured have a life insurance policy where his age was mistaken on the application. Which of the following is correct regarding the death benefit amount
The death benefit Pj will be what the premium what have purchased at the correct age
Which situation accurately describes a reduced paid up non-forfeiture option?
Policy Has a decrease face value
Barbara policy includes a rider which allows her to purchase additional insurance at specific dates or events without evidence of insurability. This writer is called a
Guaranteed insurable rider
Which statement is true regarding policy dividends?
A dividend option is selected by the insured at the time of the policy purchase
A life insurance policy owner was injured in an automobile accident which resulted in a total and permanent disabled. Which rider would pay a monthly amount because of this disability?
Disability income rider
How are act of war and aviation treated under a group life insurance policy?
policy exclusion
Pat owns a 20 pay life policy with a paid up dividend option. Which of the following statements is true
The policy may be paid up early by using policy dividends
A life insurance policy owner does not have the right to
Revoke and absolute assignment
Joanna has a $100,000 whole life policy with an accumulated $25,000 of cash value. She would like to borrow $15,000 against the cash value. Which of the following statements is true
Net death benefit will be reduced if the loan is not repaid
All of the following riders can increase the death benefit amount except
Waiver of premiums
Which policy provision protects the policy owner from unintentional lapse of the contract
Grace period
What does a grace period allowed a life insurance policy owner to do
Make a premium payment at the due date without any loss of coverage
After a policy has labs which provision allows the insured to continue coverage
Reinstatement provision
Of the following dividend options which of these is taxable
Accumulation at interest
All of these are valid policy dividends options for a life insurance policy owner except
Accumulate without interest
All of these are standard exclusion found in a life insurance policy except
Disability
The suicide clause the life insurance policy states that if insured commit suicide within a stated. From the policy exception, the insurer will only be liable to return of premium paid
Minus indebtedness and without interest
Ownership of a life insurance policy may be temporary transferred with a
Collateral assignment
Which of the following protects a policy owner from a representation  Caused by an innocent mistake
Incontestable clause
Which dividend option would an insurer invest a policy owners money and add any interest earning as a dividend accrue
Accumulation at interest option
Which of the following is a reinstatement condition
Proof of insurability
What time period allows an insured life insurance policy to remain in force even if the premium was not paid on the due date
Grace period
Which provision will pay a portion of the death benefit prior to the insured deaths due to a serious illness
Accelerated death benefit
A provision in a whole life policy that allows a policy owner to terminate the policy in return for a reduced paid up policy of the same type is called a
Nonforfeiture Provision
Bruce is involved in an accident and becomes totally and permanently disabled. His insurance policy can change of force without payment of Further premiums. Which policy provision is responsible for this?
Waiver of premium provision
Which of these is not considered to be a common life insurance nonforfeiture option
Life income annuity
Two major actions required for a policy owner to comply with the reinstatement clause are
Provide evidence of insurability, pay past due premiums
A waiver of premium rider allows an insured to wave premium payments if the insured is
Completely and permanently disable
A guarantee issue insurance policy has no
Medical underwriting
Which of the following is considered to be an alternative to a life settlement
Accelerated death benefit rider
In order to activate the reinstatement clause of a lap life insurance policy, the insured must
Provide evidence of insurability to the insurer
When an accidental death benefit is added to a whole life policy, how does this affect the policy cash value
Policy cash value is not affected
Matt is applying for life insurance and requires a double indemnity rider. A double indemnity benefit will be payable to Matt’s beneficiary if Matt 
Dies Instantly from a car accident
How is a life insurance policy dividends Legally defined
A return on excess premiums & not taxable 
An endorsement found in insurance plan which modifies the provisions of the policy is called
Rider
Which of these is not considered to be a nonforfeiture option in a whole life insurance policy
Interest only
An insured individual and the policy beneficiary dies from the same accident, the common disaster provision states to ensurer will continue as if
The insured outlives the beneficiary
Which of these Is considered to be a living benefit option in a life insurance policy?
Accelerated death benefit
The automatic premium loan provision authorize an insurer to withdraw from a policy cash value the amount of
Past due premiums they have not been paid by the end of the grace.
When the life insurance policy is surrendered, how does the cost recovery rule apply
The policy cost basis is exempt from taxation
Dorian exercise a non-forfeiture Option by using his life policy cash value to purchase an extended term insurance option. When you term insurance expires
The protection ends
Which of these is not a characteristic of the accelerated death benefit option
Benefit can’t be offered as a rider at the Pacific extra cost or maybe at no cost
In what part of the insurance policy our policies benefits found
Declarations
Kurt is an active duty service member who was recently killed in an accident while home on leave. Which military service exclusion clause would pay upon his death
Results
Which of these would limit a companies liability to provide insurance coverage
Exclusion
Which of the following is not part of an insurance contract?
Certificate or authority 
What is an insurer required to do to face with an error made under the misstatement of age provision?
Pay age corrected benefit
Free look provision gives a policy owner
The right to return the policy for a full refund within a specific number of days
Which of the following does a policy owner not have the right to change
Dividend schedule
All of the following are considered to be a nonforfeiture option available to a policy owner except
Reduction of premium
What does a guaranteed insurability option allows an insured to do
Purchase additional coverage with no evidence of insurability required
What are collateral assignment normally associated with?
Bank loans
The double indeminty provision in a life insurance policy pertains to an insured death clause by
Accident
An insurer will accept a premium from the insured and continue the coverage in force as through it was not late during the time.
Grace period
Which of these is not a valid policy dividend option?
Monthly income payments
Life insurance policies will normally pay for losses arising from
Commercial aviation
A provision that allows the policy owner to withdraw a policy cash value interest free is a
Partial surrender
If an insured age on a life insurance policy has been misstated, what is the insurer liability if the insured dies
A prorated death benefit based on the amount of insurance and insured premium would have been if purchase at the correct age
Under a life insurance policy, what does a insuring clause state
The insurer obligation to pay a death benefit upon an approved death claim
A whole life insurance policy accumulate cash value that becomes
The policy loan value with the insured may borrow against
What is the purpose of having an accelerated death benefit on a life insurance policy
In allows for cash advances to be paid against a death benefit if the insured becomes terminally ill
The rider that insurance premiums will be paid on a juvenile policy until the child reaches a specific age is called
Payor rider
If it insured die because of An accident, which type of life insurance rider will provide additional coverage
Accidental death rider
A life insurance policy can be surrendered for its cash value under which policy provision
Non-forfeiture option
Which of the following is not a common life insurance policy rider
Extended Term
Which type of rider will waive the premium on a child’s life insurance policy if the parents are paying the premium dies
Payor benefit
An Insurer can be protected from adverse elections which policy provision?
Suicide clause
What is an insurance policy grace period
Period of time at the premium is due but the policy remains in force
When in life insurance policy is surrendered, how does the cost recovery rule apply?
The policy cash value is taxation 
Which of these is not considered to be a common life insurance nonforfeiture option?
Life income annuity
Which of the following is a reinstatement condition?
Proof of insurability
Which of these would lemon a companies liability to provide insurance coverage?
Exclusion
Jerry is an insured who understated his age on his life insurance application, paying $12 per $1000 of the insurance instead of $15 per 1000. If he dies, how will the adjust death benefit be calculated?
12/15th of the policy’s face amount
Which of the following does a policy owner not have the right to change?
Dividend schedule
Which of these is not a characteristic of the accelerated death benefit option
The benefit can be offered as a rider at a specific extra cost or may be at no cost
A rider that assumes premiums will be paid on a juvenile policy until the child reaches a specific age is called a?
Payor rider
A life insurance policy can render it’s cash value on which policy provision?
Nonforfeiture option
