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Life Insurance > Policy Provisions, Riders And Options > Flashcards

Policy Provisions, Riders And Options Flashcards

1
Q

What happens to the proceeds of a life insurance policy if there’s no name beneficiary?

A

Proceeds are paid to the insureds estate

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2
Q

What nonforfeiture option is automatically selected by the company if not chosen by the policy owner?

A

Extended term

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3
Q

Under what nonforfeiture option does the company pay the policy’s surrender value and have no further obligations to the policy owner?

A

Cash Surrender

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4
Q

What type of beneficiary can be changed at any point by the policyowner?

A

Revocable

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5
Q

What provision allows the policyowner to reactivate a lapsed life insurance policy within a specified period of time with proof of insurability?

A

Reinstatement

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6
Q

When will a contingent beneficiary receive death benefits from a life insurance policy?

A

When the primary beneficiary dies before the insured

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7
Q

What nonforfeiture option provides coverage for the longest period of time?

A

Reduced paid-up

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8
Q

What provision in a life insurance policy extends coverage beyond the premium due?

A

Grace period

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9
Q

what is the purpose of the Automatic Premium Loan Provision?

A

Prevent unintentional lapse of a policy

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10
Q

To meet the requirement of the entire contract policy provision, an insurance policy must contain what?

A

Copy of original insurance application

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11
Q

What are dividend options in life insurance policies?

A

cash, reduced premium, accumulation at interest, paid-up additions, paid-up option, one-year term, and acceleration of endowment

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12
Q

What beneficiary designation has first claim death proceeds of a life insurance policy?

A

Primary Beneficiary

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13
Q

What settlement option are available in life insurance?

A

Lump-sum/cash, fixed period, fixed amount, life income, interest only

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14
Q

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?

A

Incontestability

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15
Q

What is the purpose of settlement options in life insurance policies?

A

Determining how death benefit will be paid to beneficiary

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16
Q

What does the term double indemnity mean?

A

Insurer will pay benefit twice the face amount

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17
Q

Is the beneficiary required to have insurable interest in the insured?

A

No, beneficiary’s don’t have insurable interest in the insured.

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18
Q

What can an insurance company use suicide as a defense against paying a death claim?

A

When a suicide is committed within 2 years after policy is purchased

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19
Q

What type of beneficiary is next in line after primary beneficairy?

A

Contingent beneficiary

20
Q

What dividend option is automatically selected by the company if not chosen by the policyowner?

A

paid-up additions

21
Q

With the interest only settlement option, what happens to the policy’s death benefit?

A

Policy proceeds are retained by the insurance company; only the interest is paid to the beneficiary

22
Q

In the fixed-period settlement option, how will the number of installments for the death benefit proceeds determine the amount of the installments?

A

Longer period selected, smaller each installment will be

23
Q

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?

A

Pay a reduced death benefit

24
Q

What life policy allows the company to forgo collecting the premium if the insured becomes disabled?

A

Waiver of premium

25
Q

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?

A

Entire contract

26
Q

What is the name for a life insurance poly rider that provides coverage on the insureds family members?

A

Other-insured rider

27
Q

What are policy dividends?

A

Return of unused premiums

28
Q

With the reduction of premium dividend option, how is the dividend used?

A

Dividend is applied to reduces next years premium

29
Q

If a settlement option is not chosen by the policyowner or beneficiary, what option will be used by the insurer?

A

Lump-sum payment

30
Q

An applicant for life insurance misstated her age on the policy application. How will this affect the death benefit?

A

Death benefit will be adjusted to the amount to her correct age

31
Q

Who controls changes in premium payments, face values, and loans in a life insurance policy?

A

Policyowner

32
Q

Who has the right to the cash value of a life insurance?

A

Policyowner

33
Q

What happens to a policy’s cash value under an extended term nonforfeiture option?

A

Cash vale is converted to the same face amount as in the whole life policy

34
Q

What are the most common exclusions in life insurance policies?

A

War, military service, hazardous occupation and aviation

34
Q

what is the purpose of a free-look period?

A

Allow the insured to return the policy with refund

35
Q

Which of the two types of policy assignments requires transfer of all ownership rights in the policy to a third party?

A

Absolute assignment

36
Q

What are the three nonforfeiture options in life insurance policies?

A

Cash surrender, reduced paid-up and extended term

37
Q

What is the advantage of reinstating a life insurance policy as opposed to applying for a new one?

A

Premium in a reinstated policy will be used to insureds original age

38
Q

What dividend option can increase the death benefit of the existing life policy?

A

Paid-up additions

39
Q

What nonforfeiture option provides coverage for the longest period of time?

A

Reduced paid-up

40
Q

What type of assignment is used to secure the payment of a debt with an existing life insurance policy?

A

Collateral assignment

41
Q

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?

A

Amount of loan will be subtracted from the death benefit

42
Q

What required provision protects against unintentional policy lapse?

A

Grace period

43
Q

What term is used to escribe methods of payment of the death benefit to the beneficiary upon insureds death?

A

Settlement options

44
Q

What is the purpose of settlement options in life insurance policies?

A

Determine how death benefit will be paid to the beneficiary

Life Insurance (5 decks)

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