Life Insurance Terms ch 6 quizs

Common Disaster Provision

• A provision that ensures death benefits are paid to the primary beneficiary only if they outlive the insured by a year.

• A provision that allows the insured to choose multiple primary beneficiaries for their policy.

• A provision of the Uniform Simultaneous Death Act that ensures death benefits are paid to the contingent beneficiary if both the insured and primary beneficiary die within a short period of time.

• A provision that states the primary beneficiary must be at least 18 years old to receive the proceeds.

Class Designation

• A designation for a specific individual beneficiary

• A term for a group of beneficiaries, such as all of a person’s children

• A legal term for the executor of an estate

• A classification for assets in a trust

Fixed Amount Installment Option

• This option pays a fixed death benefit in specified installment amounts until the principal and interest are exhausted.

• This option provides a variable death benefit based on market performance.

• This option pays a lump sum death benefit immediately upon death.

• This option allows for flexible installment amounts based on the policyholder's choice.

Spendthrift Clause

• It allows creditors to claim policy proceeds upon the insured's death.

• It prevents beneficiaries from spending benefits recklessly by requiring fixed payments.

• It ensures that all policy proceeds are paid in a lump sum to the beneficiary.

• It allows the policy owner to change the beneficiary at any time.

Contingent (Secondary) Beneficiary

• A beneficiary who receives benefits immediately upon the insured's death.

• The beneficiary who’s second in line to receive death benefit proceeds if the primary beneficiary dies before the insured.

• A beneficiary who is only entitled to benefits if the primary beneficiary is incapacitated.

• The primary beneficiary who has the right to change the policy terms.

Cash Value

• The amount of money paid out upon death of the insured.

• The equity or savings element of whole life insurance policies.

• The total premium paid for a life insurance policy.

• The interest rate applied to a life insurance policy.

Interest Only Option

• A settlement option where the beneficiary receives the entire death benefit immediately.

• A settlement option where the insurance company pays only the interest earned on the death benefit to the beneficiary.

• A settlement option that allows the beneficiary to invest the death benefit in stocks.

• A settlement option that pays the death benefit in monthly installments over a fixed period.

Revocable Beneficiary

• A beneficiary that cannot be changed once designated.

• A beneficiary that the policy owner may change at any time without notifying or getting permission from the beneficiary.

• A beneficiary that is only valid for a limited time period.

• A beneficiary that requires the consent of the beneficiary to be changed.

Earned Premium

• The total amount of premium that has been paid by the policy owner for coverage up to a specific point.

• The amount of premium that is refunded to the policy owner if the policy is canceled early.

• The premium amount that is considered as income for the insurance company.

• The amount of premium that’s paid by the policy owner for policy coverage or insurance protection up to a specific point.

Uniform Simultaneous Death Act

• The act states that the primary beneficiary always receives the death benefit regardless of the circumstances.

• The act states that if the insured and the primary beneficiary die in a common accident, the law assumes the insured died first.

• The act states that if the insured and the primary beneficiary die in a common accident at approximately the same time, the law assumes the primary died first, and the death benefit proceeds are paid to the contingent beneficiaries.

• The act states that the death benefit proceeds are always paid to the insured's estate.