NEW
Font size
Worksheets3-2 LIFE PROVISION
Total questions: 59
Worksheet time: 30mins
The _______is authorized to assign a Life Insurance policy as collateral for a loan
Policyowner
Insured
Lender
Insurer
P is blinded is an industrial accident, which provision on his life insurance policy will pay a stated a benefit amount?
(AD&D) Accidental Death and dismemberment clause
Accelerated Benefit provision
Entire Contract
Consideration Clause
Which of these are NOT an example of a Nonforfeiture option?
Life Income
Extended Term
Reduced Paid-up
Cash Surrender
Additional coverage can be added to a whole life policy by adding a (n)?
Decreasing Term Rider
Payor Rider
Accelerated Benefit Rider
Automatic Premium Loan Rider
A potential Client, age 40, would like to purchase a Whole Life Policy that will accumulate cash value at a faster rate in the early years of the policy. Which of these statements made by the producer would be correct?
20- Pay Life accumulates cash value faster than straight life
Straight life accumulates faster than Limited-pay Life
Cash value accumulation of both 20-Pay Life and Straight Life depend on the insurer’s financial rating
20-Pay Life and Straight Life accumulate cash value at the same rate
When the face amount of the Whole Life policy paid?
When the insured dies or at the policy’s maturity date, whichever happens first
At the policy’s maturity date only
Only when the insured dies
When the policy is surrendered
B receives yearly dividends and interest from a participating life insurance policy. Which of these should B include as gross income for federal Income Tax purpose?
Interest Only
Interest & Dividends
Dividends Only
Neither interest no dividends are taxable
What does the insuring agreement in a life insurance contract establish?
An Insurer’s basic promise
The insurance policy’s grace period
An insurer’s required reserve amount
The obligation of the beneficiary
Which of these is NOT considered to be a right given to a policyowner?
Modified a provision in the insurance contract
Surrendering the policy’s cash value
Assign of ownership
Change the beneficiary
Which of the following is an example of a Nonforfeiture option?
Reduced Paid-up Option
Conversion Option
Inflation Option
Guaranteed Insurability Option
Which of these types of policies may NOT have Automatic Premium Loan Provision attached to it?
Decreasing Term
Modified Whole Life
20-Pay Life
Endowment
The agreement in a Life Insurance Contract that states a specific sum of money will be paid to a designated person upon an insured’s death is called a (n):
Insuring Agreement
Entire Contract Provision
Consideration Clause
Assignment Agreement
Variable Whole Life Insurance can be described as
Both an insurance and security product
An insurance product only
A securities product only
The insurance company assumes the investment risk
The ____has the right to change a Life Insurance policy’s beneficiary.
Policyowner
Insurer
Insured
Beneficiary
S buys a $50,000 Whole Life policy with a $50,000 Accidental Death (AD&D) rider.
S dies 1 Year later of natural causes. How much will the insurer pay the beneficiary?
$50,000
$100,000
Refund of premiums paid plus interest
No claim will be pad because cause of death was from natural causes
What action will an insurer take if an interest payment on a policy loan is not made in time?
Automatically add the amount of interest due to the loan balance
Cancel the policy if not paid within the grace period
Subtract from any dividends owed
Disallow any further loans
A return of Premium Life insurance policy is:
Whole Life and Increasing Term
A Nonforfeiture Option
Interest-Sensitive
Variable Life
Which provision prevents an insurer from charging the term of contract with the policyowner by referring to documents not found within the policy itself?
Entire Contract Provision
Policy Exclusion
Incontestable
Assignment
P dies five years after purchasing a life policy while investigation the claim, the insurer discovered material misrepresentations made by P during the application process. Which of these actions will be insurer take?
Beneficiary will be paid the Death Benefit
Beneficiary will be denied the claim
Beneficiary will be denied the claim and refunded all paid premiums
Beneficiary will be paid a partial Death Benefit
J left her life insurance policy lapse 8 months ago due to nonpayment. She can reestablish coverage under which of the following provisions?
Reinstatements Provision
Payor clause
Automatic Loan Provision
Waive of Premium
B owns a Whole Life policy with a guaranteed insurability option that allows him to purchase without evidence of insurability, stated amount of
Additional Whole Life coverage at specified time
Additional Term Life coverage at any time
Additional Term Life coverage at specified intervals
Additional Whole Life coverage at specified times
An insured is past due on his life insurance premium, but is still within the Grace Period what will the beneficiary receive if the insured dies during this Grace Period?
Full face amount minus any past due premiums
Full face amount
Refund of all premiums paid
Refund of all the premiums paid, plus interest
A term Life Rider offers the insured
Additional Life Coverage
Cash value
Long-term care coverage
Disability protection
In a Life insurance policy, which feature states that the policy will not cover certain risks
Exclusion
Exception
Ejection
Expulsion
All of these statements about the Waiver of Premium provision are correct, EXCEPT
Insured must be eligible for Social Security disability for claim to be accepted
A waiting period must pass before becoming eligible for benefits
Waiver of premium is available on both permanent and term insurance policies
Insured must be totally disabled to qualify
How do Life Insurance Companies handle cases where the insured commits suicide within the contract’s stated Contestable period?
Claims are denied under the suicide Clause of the policy
Company pays twice the face amount under the double indemnity clause
Claims are paid in full
premiums are returned under the Consideration Clause
A cost of living rider gives the insured
Additional death benefit
Tax incentive
Monthly Income
Decreasing Premiums
Whose life is covered on a life Insurance policy that contains a Payor benefit Clause?
Child
Parent
Beneficiary
Spouse
A Whole Life insurance policyowner does NOT have the right to:
Change the Grace Period
Designate a beneficiary
Take out a policy loan
Assign the policy
All of the following statement are TRUE regarding a policy Grace Period EXCEPT
Past Due Premium are waived
Policy loans may still be made
Full coverage continues
Grace period terms are stated in the policy
A policy loan is made possible by which of these Life Insurance policy feature?
Cash Value Provision
Extended term provision
Owner’s rights provision
Consideration clause
Which of the following Non-forfeiture option offers a highest death benefit?
Extended Term
Cash surrender
Reduced term
Dividend
Which of these statements about Guaranteed Insurability Option rider is NOT TRUE?
Evidence of insurability is required when the option is exercised
Evidence of Insurability is not required when the option is exercised
Coverage can be added at specific events such as marriage or having a child
Coverage can be added at specific ages
Which of the following statements about accumulated interest earned on dividends from an insurance policy is TRUE?
Taxed as ordinary income
Partially taxable
Nontaxable
Taxed as ordinary income
What does the ownership Clause in life insurance policy states?
Who the policyowner is and what right the policyowner is entitled to
Who the beneficiary is and what rights the beneficiary is entitled to
Ownership cannot be assigned after the incontestable period
Allows the policyowner to adjust the death benefit and premium amount anytime
P is the insured on a participating life policy Which statement is true if P’s premiums are waived due to disability?
P will still receive declared dividends
P cannot borrow against the policy’s cash value while disabled
P will have to pay income taxes on the amount of premiums waived
P cannot assign ownership of the policy while premiums are being waived
How are policyowners dividends treated in regards to income tax?
Interest on accumulation is taxed
Dividends are not taxable
Taxed as ordinary income
Taxed as capital gains
Which of these provisions require proof of insurability after a policy has lapsed?
Reinstatement
Insuring
Conversion
Consideration
A (n) ______rider may be used to include coverage for children under their parents’ life insurance policy
Term
Payor
Conversion
Parent
Which type of policy contains a monthly mortality charge as well as self-directed investment choices?
Variable Universal Life
Joint Life
Adjustable Life
Universal Life
S would like to use dividends from her life insurance policy to purchase paid-up additions. All of these would be factors that determine how much coverage can be purchased EXCEPT
Beneficiary’s age
Type of life insurance
S’s attained age
Dividends amount used towards purchase
K’s whole life insurance policy lapsed two months ago due to nonpayment. She would now like to reinstate the policy. All of these statements are correct about the policy’s reinstatement EXCEPT
K will forfeit the right to use the automatic loan provision upon reinstatement
K must reinstate within a stated period
K must pay back interest and premiums
K must provide evidence of insurability
The purpose of the ____ period clause is to avoid an unintentional lapse of a life insurance policy.
A cost
Incontestable
Conversion
Conversion
The free-look provision begins
Upon receipt of the policy by the policyowner
Upon the date of the sales presentation
Upon receipt of the policy by the producer
Upon the completion of the application
When a misrepresentation on a life insurance policy application is discovered, what action may an insurance company take?
Void the policy only if it is discovered during the Contestable period and proven to be material
Void the policy if found during the Contestable period
Void the policy, no matter when it is discovered
Void the policy at any time only if it is found to be material
D owns a Whole Life policy that was purchased 10 years ago. If the premium payments suddenly stop and D takes no additional action, Which Nonforfeiture Option will the insurer likely proceed with?
Extended term
Loan provision
Reduced Paid-up
Cash Surrender
A policy loan is made possible by which of these life insurance policy features?
Cash value provision
Extended term provision
Owner’s right provision
Consideration clause
A provision in a life insurance policy that pays the policyowner an amount that does not surpass the guaranteed cash value is called the:
Policy Loan provision
Automatic Premium Loan provision
Accelerated Benefits provision
Consideration clause
Dividends paid from a life insurance policy are
Issued by the insurer
Guaranteed
Taxable
Issued by the Department of Insurance
K owns a Whole Life policy. If K wants an increasing Death Benefit to protect against inflation, which Dividend Option should she chose?
Paid-Up Additional Insurance
Cash option
Reduced Premiums
Accumulate with Interest
The incontestable clause allows an insurer to:
Contest a claim during the Contestable Period
Disallow a change of ownership throughout the Contestable period
Disallow a change of beneficiary during the Contestable period
Contest a claim at any time if the cause of death was accidental
T took out $50,000 life insurance policy with an Accidental Death and Dismemberment rider. Five years later, T commits suicide. How much will the insurer pay?
$50,000
Nothing
$100,000
The total premiums paid minus any policy loan
The Accelerated Death Benefit provision in a life insurance policy is also known as a(n):
Living Benefit
1035 exchange
Inter vivos gift
Non-forfeiture option
M had an annual life insurance premium payment due January 1. She died January 10 without making the premium payment. What action will the insurer take?
Pay face amount minus the past due premium
Collect premium from M’s estate
Deny the claim
Subtract past due premium from cash value
Which life insurance rider typically appears on the Juvenile life insurance policy?
Payor benefit rider
Decreasing term rider
Inflation rider
Waiver of premium rider
N is a student pilot with a large life insurance policy. Which of these features would limit the insurer’s obligation in the event N was killed while flying as a student pilot?
Exclusion
Misrepresentation
Collateral assignment
Concealment
Which of these life insurance riders allows the applicant to have excess coverage?
Term rider
Automatic Premium Loan rider
Waiver of Premium rider
Guarantee insurability rider
S has a Whole Life policy with a premium payment due soon. Which provision would keep the policy in force if S does not make the required payment and the policy has adequate cash value from which the premium payment can be made?
Automatic Policy Loan
Assignment
Grace Period
Waiver of Premium
A life insurance policy which ensures that the premium will be paid if the insured becomes disabled has what kind of rider attached?
Waiver of Premium
Accelerated Benefit
Cost of Living
Return of Premium
