Section Four Exam 2

Question 1

Which of these is NOT a characteristic of the Accelerated Death Benefit option?
A. The face amount and policy premium are not affected by the payment.
B. Before payment of the benefit is made, specific conditions must exist, such as suffering from a terminal illness.
C. There may be a dollar limit on the maximum benefit.
D. The benefit can be offered as a rider at a specific extra cost, or may be at no cost. Accelerated death options are offered with no increase in Premium.

Answer 1

The benefit can be offered as a rider at a specific extra cost, or maybe at no cost. Accelerated death options are offered with no increase in Premium.

Question 2

A whole life policy option where extended term insurance is selected, is called a (n)
A. Dividend option
B. Settlement option
C. Nonforfeiture option
D. Interest-only option

Answer 2

Nonforfeiture option

Question 3

All of these are valid policy dividend options for a life insurance policyowner EXCEPT
A. Cash outlay to the policyowner
B. Accumulate without interest
C. Reduction in policy premium
D. Buy additional insurance coverage

Answer 3

Accumulate without interest

Question 4

What is the name of the provision which states that a copy of the application must be attached to the policy when issued?
A. Policy summary
B. Buyers guide
C. Entire contract
D. Entire policy

Answer 4

Entire contract

Question 5

If an insured‘s age on a life insurance policy has been misstated what is the insurers liability if the insured dies?
A. No death benefit is owed because of the misstatement of age.
B. The full original death benefit listed on the policy.
C. A prorated death benefit based on the amount of insurance the insurance premiums would have been if purchased at the correct age.
D. The original death benefit listed on the policy minus any outstanding loans and interest

Answer 5

A prorated death benefit based on the amount of insurance. The insurance premiums would’ve been if purchased at the correct age.

Question 6

An error was made on Mary’s life insurance application. Which of the following areas do errors commonly occur on applications, and for which the incontestable clause does NOT apply?
A. Marital status
B. Age
C. Address
D. Income

Answer 6

Age

Question 7

A guaranteed issue insurance policy has no
A. Initial premium requirement
B. Incontestable period
C. Waiting period
D. Medical underwriting

Answer 7

Medical underwriting

Question 8

All of the following are considered to be nonforfeiture options available to a policy owner EXCEPT
A. Extended term insurance
B. Cash surrender
C. Reduction of premium
D. Reduced paid-up insurance

Answer 8

Reduction of premium

Question 9

An insurer will except a premium from the insured and continue the coverage in full force as though it was NOT late during which time period?
A. Incontestable period
B. Probation period
C. Reinstatement period
D. Grace period

Answer 9

Grace Period

Question 10

A provision that allows the policy owner to temporary give up ownership rights to secure a loan is called a (n)
A. Automatic premium loan
B. Nonforfeiture option
C. Collateral assignment
D. Irrevocable assignment

Answer 10

Collateral assignment

Question 11

Life insurance policies will normally pay for losses arising from
A. Commercial aviation
B. War
C. Suicide
D. Hazardous jobs

Answer 11

Commercial aviation

Question 12

Matt is applying for life insurance and requests a double indemnity rider. A double indemnity benefit will be payable to Matt’s beneficiary if Matt
A. Is killed while committing a felony
B. Dies of a stroke
C. Dies instantly from a car accident
D. Is injured in a skiing accident and dies 18 months later

Answer 12

Dies instantly from a car accident

Question 13

Which of these is NOT considered to be a common life insurance and nonforfeiture option?
A. Cash surrender
B. Extended term insurance
C. Reduced paid-up insurance
D. Life income annuity.

Answer 13

Life income annuity

Question 14

All of the following riders can increase the death benefit amount EXCEPT
A. Cost of living
B. Waiver of premium
B. Accidental death rider
D. Guaranteed insurability

Answer 14

Waiver of premium

Question 15

A whole life insurance policy accumulate cash value that becomes
A. The policy loan value which the insured may borrow against
A. The death benefit
B. The source of funding for administration fees
C. A source of funding a term rider to the policy

Answer 15

The policy loan value which the insured may borrow against

Question 16

Which of the following is a reinstatement condition?
A. Proof of insurability
B. Changes in the insuring clause
C. Premium increase
D. Premium decrease

Answer 16

Proof of insurability

Question 17

An endorsement found in an insurance plan which modifies the provisions of the policy is called a(n)
A. Attachment
B. Add-on
C. Rider
D. Supplement

Answer 17

Rider

Question 18

Ownership of a life insurance policy may be temporarily transferred with a(n)
A. Collateral assignment
B. Absolute assignment
C. Transferable assignment
D. Beneficiary assignment

Answer 18

Collateral assignment

Question 19

A waiver of premium rider allows an insured to wave premium payments if the insured is
A. Temporary disabled
B. Unemployed
C. Completely and permanently disabled
D. Experiencing financial hardship.

Answer 19

Completely and permanently disabled

Question 20

And insured individual and the policies beneficiary die from the same accident. The common disaster provision states that the insurer will continue as if
A. The insured outlived the beneficiary
B. The beneficiary outlived the insured
C. No beneficiary was ever named
D. The insured and beneficiary died at the same time

Answer 20

The insured outlived the beneficiary

Question 21

What is an insurance policies grace period?
A. Period of time after the initial premium is paid and before the policy is issued.
B. Period of time it takes for a policies underwriter to complete.
C. Period of time after a policy is issued and before it is delivered to policy owner.
D. Period of time after the premium is due but the policy remains in force.

Answer 21

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

Question 22

James is the insured on a life insurance policy where is age was misstated on the application. Which of the following is CORRECT regarding the death benefit amount?
A. The original face amount will be paid to the beneficiary
B. The policy will be avoided with no death benefits paid
C. The death benefit paid will be with the premium would have purchased at the correct age
D. The amount of premiums paid will be returned with interest

Answer 22

The death benefit paid will be with the premium would have purchased at the correct age

Question 23

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 accumulated cash values.
B. The policy may be paid up early using policy dividends.
C. The policy premiums will increase after 20 years.
D. The policies cash value’s steadily decrease after 20 years.

Answer 23

The policy may be paid up early by using policy dividends

Question 24

In order to activate the reinstatement clause of a lapsed life insurance policy, the insured MUST
A. Remit all passed a Premium’s within the grace period
B. Provide evidence of insurability to the insurer
C. Resubmit a new life insurance application
D. Provide a valid reason for the laps

Answer 24

Provide evidence of insurability to the insurer

Question 25

Joanne 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 are TRUE?
A. Net death benefit will be reduced if the loan is not repaid.
B. No interest will be charged and loan balance.
C. Term life policies are the only type of insurance that allows policy loans.
D. A loan can be taken out for up to the face amount of the policy.

Answer 25

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