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A waiver of premium rider allows an insured to waive premium payments if the insured is A) temporarily disabled |
C) completely and permanently disabled |
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Which of the following is NOT a common life insurance policy rider? A) extended term |
A) extended term |
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A policyowner may exercise which of these dividend options that uses the dividend to pay all or part of the next premium due? A) Reduction of premium dividend option |
A) Reduction of premium dividend option |
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If an insured’s age on a life insurance policy has been misstated, what is the insurer’s liability if the insured dies? A) No death benefit is owed because of the misstatement of age |
C) A prorated death benefit based on the amount of insurance the insured’s premiums would have been if purchased at the correct age |
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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 |
C) Entire Contract |
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A provision that allows a policyowner to temporarily give up ownership rights to secure a loan is called a(n) A) automatic premium loan |
C) collateral assignment |
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Of the following dividend options, which of these is taxable? A) Reduction of premium |
D) Accumulation at interest |
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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 is TRUE? A) Net death benefit will be reduced if the loan is not repaid |
A) Net death benefit will be reduced if the loan is not repaid |
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Life insurance policies will normally pay for losses arising from A) commercial aviation |
A) commercial aviation |
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A provision in a whole life policy that allows a policyowner to terminate the policy in return for a reduced paid-up policy of the same type is called a(n) A) insuring clause |
D) nonforfeiture provision |
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A whole life insurance policy accumulates cash value that becomes A) the policy loan value which the insured may borrow against |
A) the policy loan value which the insured may borrow against |
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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) Martial status |
B) Age |
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A life insurance policy normally contains a provision that restricts coverage in the event of death under all of the following situations EXCEPT A) fare-paying passenger |
A) fare-paying passenger |
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What does the guaranteed insurability option allow an insured to do? A) Transfer ownership of the policy |
B) Purchase additional coverage with no evidence of insurability required |
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Loans obtained by a policyowner against the cash value of a life insurance policy A) are treated as taxable income |
B) would not be treated as taxable income |
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The free-look provision gives the policyowner A) the right to return the policy for a partial refund within a specified number of days |
D) the right to return the policy for a full refund within a specified number of days |
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The double indemnity provision in a life insurance policy pertains to an insured’s death caused by a(n) A) sickness |
C) accident |
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If an insured dies because of an accident, which type of life insurance rider will provide additional coverage? A) Accidental death rider |
A) Accidental death rider |
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In a life insurance policy, the entire contract consists of A) policy and conditional receipt |
D) policy and attached application |
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Ownership of a life insurance policy may be temporarily transferred with a(n) A) collateral assignment |
A) collateral assignment |
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Mike and Ike are 30 year old identical twins. Both are in excellent health. Each brother purchases a life policy that has a $750 annual premium. Mike buys a 10-year renewable term policy. Ike purchases a whole life policy. All of the following statements are true EXCEPT A) Mike’s policy will develop no cash value over the policy’s term |
D) Mike has the option of using his cash value to purchase a reduced amount of paid-up whole life insurance |
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When a life insurance policy is surrendered, how does the cost recovery rule apply? A) The policy’s cost basis is taxable |
D) The policy’s cost basic is exempt from taxation |
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Which of these is NOT considered to be a nonforfeiture option in a whole life insurance policy? A) Interest only |
A) Interest only |
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What does the grace period allow a life insurance policyowner to do? A) Contest the terms of the policy after the issue date |
B) Make a premium payment after the due date without any loss of coverage |
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What is an insurer required to do when faced with an error made under the Misstatement of Age provision? A) Cancel the policy |
B) Pay age-corrected benefits |
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How are acts of war and aviation treated under a group life insurance policy? A) Optional rider |
B) Policy exclusion |
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In order to activate the reinstatement clause of a lapsed life insurance policy, the insured MUST A) remit all past-due premiums within the grace period |
B) provide evidence of insurability to the insurer |
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A life insurance policyowner was injured in an automobile accident which results in a total and permanent disability. Which rider would pay a monthly amount because of this disability? A) Long-term care rider |
B) Disability income rider |
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An endorsement found in an insurance plan which modifies the provisions of the policy is called a(n) A) attachment |
C) rider |
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Which of these is considered to be a Living Benefit option in a life insurance policy? A) Reinstatement |
C) Accelerated death benefit |
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What is an insurance policy’s grace period? A) Period of time after the initial premium is paid and before the policy is issued |
D) Period of time after the premium is due but the policy remains in force |
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All of these are common exclusions to a life insurance policy EXCEPT A) accidental death |
A) accidental death |
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After a policy has lapsed, which provision allows the insured to continue coverage? A) Entire contract provision |
B) Reinstatement provision |
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What is the purpose for having an accelerated death benefit on a life insurance policy? A) It allows for a spouse to be added as a rider to a life insurance policy |
C) It allows for cash advances to be paid against the death benefit if the insured becomes terminally ill |
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A life insurance policy can be surrendered for its cash value under which policy provision? A) Payor options |
D) Nonforfeiture options |
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Which statement is true regarding policy dividends? A) Dividends are always guaranteed |
D) A dividend option is selected by the insured at the time of policy purchase |
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Bruce is involved in an accident and becomes totally and permanently disabled. His insurance policy continues in force without payment of further premiums. Which policy provision is responsible for this? A) Waiver of premium provision |
A) Waiver of premium provision |
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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 |
C) dies instantly from a car accident |
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Which dividend option would an insurer invest the policyowner’s money and add any interest earnings as the dividends accrue? A) Accumulation at Interest Option |
A) Accumulation at Interest Option |
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A life insurance policyowner does NOT have the right to A) change a beneficiary |
D) revoke an absolute assignment |
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Which type of rider will waive the premium on a child’s life insurance policy if the parent paying the premium dies? A) Waiver of premium |
D) Payor benefit |
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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 |
D) The benefit can be offered as a rider at a specific extra cost or may be at no cost |
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What time period allows an insured’s life insurance policy to remain in force even if the premium was not paid on the due date? A) Entire contract period |
D) Grace period |
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Kurt is an active duty serviceman who was recently killed in an accident while home on leave. Which military service exclusion clause would pay upon his death? A) Active |
C) Results |
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A life insurance rider that allows an individual to purchase insurance as they grow older, regardless of insurability, is called a(n) A) guaranteed term rider |
B) guaranteed insurability rider |
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When an accidental death benefit is added to a whole life policy, how does this affect the policy’s cash value? A) Increases the policy’s cash value |
C) Policy’s cash value is not affected |
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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 by using policy dividends |
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A guaranteed issue insurance policy has no A) initial premium requirement |
D) medical underwriting |
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Which situation accurately describes a reduced paid-up nonforfeiture option? A) Policy has a decreased face amount |
A) Policy has a decreased face amount |
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An insurer can be protected from adverse selection with which policy provision? A) Insuring clause |
C) Suicide clause |
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A whole life policy option where extended term insurance is selected is called a(n) A) dividend option |
C) nonforfeiture option |
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Ron has a life insurance policy with a face value of $100,000 and a cost of living rider. If the consumer price index has gone up 4%, how much may Ron increase the face value of the policy? A) $400 |
D) $4,000 |
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A rider that assures premiums will be paid on a juvenile policy until the child reaches a specific age is called a(n) A) waiver of premium rider |
B) payor rider |
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If an insured dies during the grace period with no premiums paid A) the policy would be payable, minus the premium amount |
A) the policy would be payable, minus the premium amount |
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The two major actions required for a policyholder to comply with the Reinstatement Clause are A) provide evidence of insurability, agree to a new incontestable period |
B) provide evidence of insurability, pay past due premiums |
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Which of the following is NOT part of an insurance contract? A) Policy |
D) Certificate of Authority |
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All of these are valid policy dividend options for a life insurance policyowner EXCEPT A) cash outlay to the policyowner |
B) accumulate without interest |
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All of the following are considered to be nonforfeiture options available to a policyowner EXCEPT A) Extended Term Insurance |
C) Reduction of Premium |
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Which of the following does a policyowner NOT have a right to change? A) Payment mode |
C) Dividend schedule |
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Which provision will pay a portion of the death benefit prior to the insured’s death due to a serious illness? A) Cash surrender |
D) Accelerated death benefit |
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Barbara’s policy includes a rider which allows her to purchase additional insurance at specific dates or events without evidence of insurability. This rider is called a(n) A) Guaranteed insurability rider |
A) Guaranteed insurability rider |
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Under a life insurance policy, what does the insuring clause state? A) The agent’s obligation to provide the proper amount of coverage |
C) The insurer’s obligation to pay a death benefit upon an approved death claim |
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Which of these is NOT a valid policy dividend option? A) Reduce premium |
D) Monthly income payments |
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Which of the following is a restatement condition? A) Proof of insurability |
A) Proof of insurability |
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Which of the following protects a policyowner from a misrepresentation caused by an innocent mistake? A) Reinstatement clause |
C) Incontestable clause |
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In what part of an insurance policy are policy benefits found? A) Declarations |
A) Declarations |
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Which of the following is considered to be an alternative to a life settlement? A) Accelerated death benefit rider |
A) Accelerated death benefit rider |
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A provision that allows a policyowner to withdraw a policy’s cash value interest free is a(n) A) partial surrender |
A) partial surrender |
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How is a life insurance policy dividend legally defined? A) A return of excess premium and partially taxable |
C) A return of excess premium and not taxable |
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All of the following riders can increase the death benefit amount EXCEPT A) Cost of Living |
B) Waiver of Premium |
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The suicide clause of a life insurance policy states that if an insured commits suicide within a stated period from the policy’s inception, the insurer will only be liable for a return of premiums paid A) minus indebtedness and with interest |
C) minus indebtedness and without interest |
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James is the insured on a life insurance policy where his 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 |
C) The death benefit paid will be what the premium would be purchased at the correct age |
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Which policy provision protects the policyowner from unintentional lapse of the contract? A) Grace period |
A) Grace period |
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Dorian exercised a nonforfeiture option by using his life policy’s cash value to purchase an extended term insurance option. When the term insurance expires, A) he has the option of resuming the original policy and paying the same premium |
D) the protection ends |
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Which of these is NOT considered to be a common life insurance nonforfeiture option? A) Cash surrender |
D) Life income annuity |
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An insurer will accept 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 |
D) Grace period |
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All of these are standard exclusions found in a life insurance policy EXCEPT A) hazardous occupations |
C) disability |
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An insured individual and the policy’s beneficiary die from the same accident. The common disaster provision states the insurer will continue as if A) the insured outlived the beneficiary |
A) the insured outlived the beneficiary |
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Jerry is an insured who understated his age on his life insurance application, paying $12 per $1,000 of insurance instead of $15 per $1,000. If he dies, how will the adjusted death benefit be calculated? A) 12/15th of the policy’s face amount |
A) 12/15th of the policy’s face amount |
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What are collateral assignments normally associated with? A) Bank loans |
A) Bank loans |
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The automatic premium loan provision authorizes an insurer to withdraw from a policy’s cash value the amount of A) any interest payable from an outstanding policy loan balance |
B) past due premiums that have not been paid by the end of the grace period |
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Which of these would limit a company’s liability to provide insurance coverage? A) Waiver |
B) Exclusion |
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When does a life insurance policy’s waiver of premium take effect? A) Insured becomes unemployed |
B) Insured becomes totally disabled |
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