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Basic Principles Of Insurance > Policy, Provisions, Options, & Riders > Flashcards

Policy, Provisions, Options, & Riders Flashcards

1
Q

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

A

Mike has the option of using his cash value to purchase a reduced amount of paid up whole life insurance

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2
Q

A life insurance rider that allows an individual to purchase insurance as they grow older, regardless of insurability is called

A

Guaranteed Insurability rider

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3
Q

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

A

Age

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4
Q

A policy owner may exercise which of these dividends options that uses the dividend to pay all or part of the next premium due?

A

Reduction of premium dividend option

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5
Q

When does a life insurance policy waiver of premium takes effect

A

Insured becomes totally disable

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6
Q

All of these are coming exclusions to the life insurance policy except

A

Accidental death

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7
Q

In a life insurance policy, the entire contract consist of

A

Policies and attached application

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8
Q

A whole life policy option where extended term insurance is selected is called

A

Non-forfeiture option

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9
Q

If an insured dies doing the grace period with no premiums paid

A

The policy would be payable, minus the premium amount

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10
Q

What is the name of the provision which states a copy of the application must be attached to the policy when issue

A

Entire contract

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11
Q

A life insurance policy normally contains a provision that restrict coverage in the event of a death other all of the following situations except

A

Fare paying passenger

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12
Q

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?

A

4000

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13
Q

 Loans obtain by a policy owner against the cash value of a life insurance policy

A

Would not be treated as a taxable income

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14
Q

A provision that allows a policy owner to temporary give up ownership rights to secure a loan is called

A

Collateral assignment

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15
Q

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

A

The death benefit Pj will be what the premium what have purchased at the correct age

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16
Q

Which situation accurately describes a reduced paid up non-forfeiture option?

A

Policy Has a decrease face value

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17
Q

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

A

Guaranteed insurable rider

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18
Q

Which statement is true regarding policy dividends?

A

A dividend option is selected by the insured at the time of the policy purchase

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19
Q

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?

A

Disability income rider

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20
Q

How are act of war and aviation treated under a group life insurance policy?

A

policy exclusion

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21
Q

Pat owns a 20 pay life policy with a paid up dividend option. Which of the following statements is true

A

The policy may be paid up early by using policy dividends

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22
Q

A life insurance policy owner does not have the right to

A

Revoke and absolute assignment

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23
Q

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

A

Net death benefit will be reduced if the loan is not repaid

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24
Q

All of the following riders can increase the death benefit amount except

A

Waiver of premiums

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25
Q

Which policy provision protects the policy owner from unintentional lapse of the contract

A

Grace period

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26
Q

What does a grace period allowed a life insurance policy owner to do

A

Make a premium payment at the due date without any loss of coverage

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27
Q

After a policy has labs which provision allows the insured to continue coverage

A

Reinstatement provision

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28
Q

Of the following dividend options which of these is taxable

A

Accumulation at interest

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29
Q

All of these are valid policy dividends options for a life insurance policy owner except

A

Accumulate without interest

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30
Q

All of these are standard exclusion found in a life insurance policy except

A

Disability

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31
Q

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

A

Minus indebtedness and without interest

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32
Q

Ownership of a life insurance policy may be temporary transferred with a

A

Collateral assignment

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33
Q

Which of the following protects a policy owner from a representation  Caused by an innocent mistake

A

Incontestable clause

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34
Q

Which dividend option would an insurer invest a policy owners money and add any interest earning as a dividend accrue

A

Accumulation at interest option

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35
Q

Which of the following is a reinstatement condition

A

Proof of insurability

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36
Q

What time period allows an insured life insurance policy to remain in force even if the premium was not paid on the due date

A

Grace period

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37
Q

Which provision will pay a portion of the death benefit prior to the insured deaths due to a serious illness

A

Accelerated death benefit

38
Q

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

A

Nonforfeiture Provision

39
Q

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?

A

Waiver of premium provision

40
Q

Which of these is not considered to be a common life insurance nonforfeiture option

A

Life income annuity

41
Q

Two major actions required for a policy owner to comply with the reinstatement clause are

A

Provide evidence of insurability, pay past due premiums

42
Q

A waiver of premium rider allows an insured to wave premium payments if the insured is

A

Completely and permanently disable

43
Q

A guarantee issue insurance policy has no

A

Medical underwriting

44
Q

Which of the following is considered to be an alternative to a life settlement

A

Accelerated death benefit rider

45
Q

In order to activate the reinstatement clause of a lap life insurance policy, the insured must

A

Provide evidence of insurability to the insurer

46
Q

When an accidental death benefit is added to a whole life policy, how does this affect the policy cash value

A

Policy cash value is not affected

47
Q

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 

A

Dies Instantly from a car accident

48
Q

How is a life insurance policy dividends Legally defined

A

A return on excess premiums & not taxable 

49
Q

An endorsement found in insurance plan which modifies the provisions of the policy is called

A

Rider

50
Q

Which of these is not considered to be a nonforfeiture option in a whole life insurance policy

A

Interest only

51
Q

An insured individual and the policy beneficiary dies from the same accident, the common disaster provision states to ensurer will continue as if

A

The insured outlives the beneficiary

52
Q

Which of these Is considered to be a living benefit option in a life insurance policy?

A

Accelerated death benefit

53
Q

The automatic premium loan provision authorize an insurer to withdraw from a policy cash value the amount of

A

Past due premiums they have not been paid by the end of the grace.

54
Q

When the life insurance policy is surrendered, how does the cost recovery rule apply

A

The policy cost basis is exempt from taxation

55
Q

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

A

The protection ends

56
Q

Which of these is not a characteristic of the accelerated death benefit option

A

Benefit can’t be offered as a rider at the Pacific extra cost or maybe at no cost

57
Q

In what part of the insurance policy our policies benefits found

A

Declarations

58
Q

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

A

Results

59
Q

Which of these would limit a companies liability to provide insurance coverage

A

Exclusion

60
Q

Which of the following is not part of an insurance contract?

A

Certificate or authority 

61
Q

What is an insurer required to do to face with an error made under the misstatement of age provision?

A

Pay age corrected benefit

62
Q

Free look provision gives a policy owner

A

The right to return the policy for a full refund within a specific number of days

63
Q

Which of the following does a policy owner not have the right to change

A

Dividend schedule

64
Q

All of the following are considered to be a nonforfeiture option available to a policy owner except

A

Reduction of premium

65
Q

What does a guaranteed insurability option allows an insured to do

A

Purchase additional coverage with no evidence of insurability required

66
Q

What are collateral assignment normally associated with?

A

Bank loans

67
Q

The double indeminty provision in a life insurance policy pertains to an insured death clause by

A

Accident

68
Q

An insurer will accept a premium from the insured and continue the coverage in force as through it was not late during the time.

A

Grace period

69
Q

Which of these is not a valid policy dividend option?

A

Monthly income payments

70
Q

Life insurance policies will normally pay for losses arising from

A

Commercial aviation

71
Q

A provision that allows the policy owner to withdraw a policy cash value interest free is a

A

Partial surrender

72
Q

If an insured age on a life insurance policy has been misstated, what is the insurer liability if the insured dies

A

A prorated death benefit based on the amount of insurance and insured premium would have been if purchase at the correct age

73
Q

Under a life insurance policy, what does a insuring clause state

A

The insurer obligation to pay a death benefit upon an approved death claim

74
Q

A whole life insurance policy accumulate cash value that becomes

A

The policy loan value with the insured may borrow against

75
Q

What is the purpose of having an accelerated death benefit on a life insurance policy

A

In allows for cash advances to be paid against a death benefit if the insured becomes terminally ill

76
Q

The rider that insurance premiums will be paid on a juvenile policy until the child reaches a specific age is called

A

Payor rider

77
Q

If it insured die because of An accident, which type of life insurance rider will provide additional coverage

A

Accidental death rider

78
Q

A life insurance policy can be surrendered for its cash value under which policy provision

A

Non-forfeiture option

79
Q

Which of the following is not a common life insurance policy rider

A

Extended Term

80
Q

Which type of rider will waive the premium on a child’s life insurance policy if the parents are paying the premium dies

A

Payor benefit

81
Q

An Insurer can be protected from adverse elections which policy provision?

A

Suicide clause

82
Q

What is an insurance policy grace period

A

Period of time at the premium is due but the policy remains in force

83
Q

When in life insurance policy is surrendered, how does the cost recovery rule apply?

A

The policy cash value is taxation 

84
Q

Which of these is not considered to be a common life insurance nonforfeiture option?

A

Life income annuity

85
Q

Which of the following is a reinstatement condition?

A

Proof of insurability

86
Q

Which of these would lemon a companies liability to provide insurance coverage?

A

Exclusion

87
Q

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?

A

12/15th of the policy’s face amount

88
Q

Which of the following does a policy owner not have the right to change?

A

Dividend schedule

89
Q

Which of these is not a characteristic of the accelerated death benefit option

A

The benefit can be offered as a rider at a specific extra cost or may be at no cost

90
Q

A rider that assumes premiums will be paid on a juvenile policy until the child reaches a specific age is called a?

A

Payor rider

91
Q

A life insurance policy can render it’s cash value on which policy provision?

A

Nonforfeiture option

Basic Principles Of Insurance (11 decks)

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