Unit #4 Life Insurance Policy Provisions, Rider, Options, And Exclusion

Question 1

What’s does automatic loan provision do?

Answer 1

The insurance company ( insurer ) borrows the premium amount from your saving ( cash value ) to keep it enforce. Only for permanent insurance.

Question 2

Under the premium loan provision, if an insured dies while a loan from the cash value is outstanding the outstanding balance of the loan is ?

Answer 2

It deducted from the face amount of the policy.

Question 3

What is Collateral assignment ?

Answer 3

Example: its your saving or death benefit is used temporary use for a loan.

Question 4

Absolute assignment is used for ?

Answer 4

It transfer ownership of the policy. (Permanent use)

Question 5

If the insured commits suicide in first two years of the policy ?

Answer 5

The death benefit will not be paid because it has to be two years after.

Question 6

So if an insured misstates his/her age or gender on the policy. What is the agent to do ?

Answer 6

The face amount of the policy will adjust what the premium would have purchase for the correct age and gender.

Question 7

What does the nonforfeiture option does for the policy?

Answer 7

Allows the owner to keep the cash value if the policy lapses or is surrendered.

Question 8

What are the three nonforfeiture options ?

Answer 8

Cash value surrender, reduced paid-up, and extended term

Question 9

What is extended term?

Answer 9

Option to have term insurance with more protection but has no cash value.

Question 10

Who issued a nonparticipating policy ?

Answer 10

The stock insurer

Question 11

Does the beneficiary have to have interest to collect a life policy?

Answer 11

No, the beneficiary doesn’t need to have interest to collect the life policy

Question 12

Primary, secondary, tertiary are order of succession. But anything after primary beneficiary are?

Answer 12

Contingent beneficiaries

Question 13

What is revocable beneficiary ?

Answer 13

Intrested in the face amount and can be replace by the policyowner

Question 14

Uniform simultaneous death act: if the beneficiary and the insured both died in a car crash, what is determine ?

Answer 14

It is assumed that the beneficiary died first and the insured died second .

Question 15

What is the common disaster clause ?

Answer 15

If the insured doesn’t survive after the insured by few days. then the estate takes the policy.

Question 16

How does the spendthrift clause protect the policy?

Answer 16

Spendthrift clause protects the policy proceeds from the policyowner or beneficiary creditors

Question 17

What does the payment provision is allowed to do and is it found in the industrial policies ?

Answer 17

Yes, it is found in the industrial polices and payment provision pay all or part of proceeds to someone who is not named the beneficiary.

Question 18

What does the entire contract consists ?

Answer 18

The policy and a copy of the application

Question 19

Who has the right to change the policy ?

Answer 19

Only the executive officer of the insurance company has the right to change the policy

Question 20

How long is the free look period and when does it begin ?

Answer 20

Its a 10 day free look period and it begins on the date of delivery not when the company issues the policy.

Question 21

If the policy owner dies during the grace period, what will the beneficiary receive ?

Answer 21

The death benefit minus the unpaid premium

Question 22

What must the insured do to reinstate his/her policy?

Answer 22

Apply within 3yrs, payback all premiums plus interest, pay back any outstanding premium loans, provide proof of insurability

Question 23

What does the ownership provision allows you to do?

Answer 23

It allows policyowner to change beneficiaries
Premium payment modes and
Settlement options; the right to transfer or assign the policy;
And the right to own the cash value.