Policy Provisions, Riders And Options Flashcards
What happens to the proceeds of a life insurance policy if there’s no name beneficiary?
Proceeds are paid to the insureds estate
What nonforfeiture option is automatically selected by the company if not chosen by the policy owner?
Extended term
Under what nonforfeiture option does the company pay the policy’s surrender value and have no further obligations to the policy owner?
Cash Surrender
What type of beneficiary can be changed at any point by the policyowner?
Revocable
What provision allows the policyowner to reactivate a lapsed life insurance policy within a specified period of time with proof of insurability?
Reinstatement
When will a contingent beneficiary receive death benefits from a life insurance policy?
When the primary beneficiary dies before the insured
What nonforfeiture option provides coverage for the longest period of time?
Reduced paid-up
What provision in a life insurance policy extends coverage beyond the premium due?
Grace period
what is the purpose of the Automatic Premium Loan Provision?
Prevent unintentional lapse of a policy
To meet the requirement of the entire contract policy provision, an insurance policy must contain what?
Copy of original insurance application
What are dividend options in life insurance policies?
cash, reduced premium, accumulation at interest, paid-up additions, paid-up option, one-year term, and acceleration of endowment
What beneficiary designation has first claim death proceeds of a life insurance policy?
Primary Beneficiary
What settlement option are available in life insurance?
Lump-sum/cash, fixed period, fixed amount, life income, interest only
What life insurance policy provisions prevents an insurer from disrupting or denying a claim due to misrepresentations on the applications after a certain period of time?
Incontestability
What is the purpose of settlement options in life insurance policies?
Determining how death benefit will be paid to beneficiary
What does the term double indemnity mean?
Insurer will pay benefit twice the face amount
Is the beneficiary required to have insurable interest in the insured?
No, beneficiary’s don’t have insurable interest in the insured.
What can an insurance company use suicide as a defense against paying a death claim?
When a suicide is committed within 2 years after policy is purchased
What type of beneficiary is next in line after primary beneficairy?
Contingent beneficiary
What dividend option is automatically selected by the company if not chosen by the policyowner?
paid-up additions
With the interest only settlement option, what happens to the policy’s death benefit?
Policy proceeds are retained by the insurance company; only the interest is paid to the beneficiary
In the fixed-period settlement option, how will the number of installments for the death benefit proceeds determine the amount of the installments?
Longer period selected, smaller each installment will be
Insurer has discovered a representation on a life insurance policy 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?
Pay a reduced death benefit
What life policy allows the company to forgo collecting the premium if the insured becomes disabled?
Waiver of premium
What life policy provision states that both the policy and a copy of thre application form the contract between the policy owner and the insurer?
Entire contract
What is the name for a life insurance poly rider that provides coverage on the insureds family members?
Other-insured rider
What are policy dividends?
Return of unused premiums
With the reduction of premium dividend option, how is the dividend used?
Dividend is applied to reduces next years premium
If a settlement option is not chosen by the policyowner or beneficiary, what option will be used by the insurer?
Lump-sum payment
An applicant for life insurance misstated her age on the policy application. How will this affect the death benefit?
Death benefit will be adjusted to the amount to her correct age
Who controls changes in premium payments, face values, and loans in a life insurance policy?
Policyowner
Who has the right to the cash value of a life insurance?
Policyowner
What happens to a policy’s cash value under an extended term nonforfeiture option?
Cash vale is converted to the same face amount as in the whole life policy
What are the most common exclusions in life insurance policies?
War, military service, hazardous occupation and aviation
what is the purpose of a free-look period?
Allow the insured to return the policy with refund
Which of the two types of policy assignments requires transfer of all ownership rights in the policy to a third party?
Absolute assignment
What are the three nonforfeiture options in life insurance policies?
Cash surrender, reduced paid-up and extended term
What is the advantage of reinstating a life insurance policy as opposed to applying for a new one?
Premium in a reinstated policy will be used to insureds original age
What dividend option can increase the death benefit of the existing life policy?
Paid-up additions
What nonforfeiture option provides coverage for the longest period of time?
Reduced paid-up
What type of assignment is used to secure the payment of a debt with an existing life insurance policy?
Collateral assignment
A policyowner borrowed a portion a cash value from his whole life policy. If the loan is not repaid, how will that affect the death benefit to the beneficiary?
Amount of loan will be subtracted from the death benefit
What required provision protects against unintentional policy lapse?
Grace period
What term is used to escribe methods of payment of the death benefit to the beneficiary upon insureds death?
Settlement options
What is the purpose of settlement options in life insurance policies?
Determine how death benefit will be paid to the beneficiary
