Chapter 3 Policy Provisions and other options

An absolute assignment is a

• Change of insurer.

• Transfer of all ownership rights in a policy

• Transfer of some ownership rights in a policy

• Change of beneficiary

A business owner was trying to obtain a bank loan to fund the purchase of a new business facility, but the bank required proof of additional assets to secure the loan. The business owner then decided to use her $250,000 life insurance policy to secure the loan. Which provision makes this possible?

• Collateral assignment

• Insurable interest

• Modification clause

• Ownership provision

The automatic premium loan provision is activated at the end of the

• Free-look period

• Elimination Period

• Policy Period

• Grace period

What is the other term for the cash payment settlement option?

• Face amount

• Proceeds

• Lump sum

• Principal amount

When a policyowner designates a group of individuals as the beneficiary of a life insurance death benefit without specifically naming the individuals, this is called

• Irrevocable designation.

• Stirpes designation.

• Class designation

• Revocable designation

Which of the following applies to the 10-day free-look privilege?

• It is granted only at the option of the agent.

• It permits the insured to return the policy for a full refund of premiums paid

• It allows the insured 10 days to pay the initial premium.

• It can be waived only by the insurance company.

When the policyowner specifies a dollar amount in which installments are to be paid, he/she has chosen which settlement option?

• Fixed periof

• Life income period certain

• extended term

• fixed amount

The two main categories of policy loan interest rates are

• Compound and variable.

• Fixed or Variable

• Simple or compund

• Fixed or Simple

Which of the following statements is TRUE concerning irrevocable beneficiaries?

• They may be changed only on the anniversary date of the policy.

• They can be changed only with the written consent of that benficiary

• They may be changed at any time.

• They can never be changed.

According to the Entire Contract provision, a policy must contain

• A declarations page with a summary of insureds.

• Buyer’s guide to life insurance.

• Listing of the insured’s former insurer(s) for incontestability provisions.

• A copy of the original application for insurance.