LIFE INSURANCE POLICY OPTIONS AND BENEFIT RIDERS

Question 1

what type of assignment is used when selling a policy to a VSP?

Answer 1

absolute assignment

Question 2

Premium rates for aditional insurance purchased under the GI rider are based on insured’s ___ or ___ age.

Answer 2

attained or actual age

Question 3

name the six dividend options

Answer 3

cash, reduce premiums, accumulate at interest, paid-up permanent additions, paid-up option, and one-year term

Question 4

once the VSP buys a contract, it is responsible for future ____

Answer 4

premium payments

Question 5

The sale of a policy to a VSP may affect a person’s eligibility for ____ assistance.

Answer 5

public assistance

Question 6

What does the guaranteed insurability rider allow?

Answer 6

It allows additional coverage to be purchased without the insured having to prove they are insurable.

Question 7

Who negotiates a VSP purchase?

Answer 7

A viatical settlement broker

Question 8

which settlement option indicates the beneficiary is most concerted with receiving income for a specific period of time?

Answer 8

Fixed period

Question 9

What settlement option uses all or a portion of the death benefit to provide an income for life?

Answer 9

the life income option

Question 10

dividends are considered a return of ____ premium, and are not _____ when return to policyowners.

Answer 10

overpaid premium, not taxable

Question 11

T or F: Interest earned on dividends left with the insurer to accumulate is not taxable

Answer 11

false

Question 12

what is the limitation to an accidental death rider?

Answer 12

it only pays for accidental death

Question 13

what dividend option provides the greatest additional amount of death benefit protection for a limited period?

Answer 13

the one-year term option

Question 14

when a policy is sold to a VSP, who becomes the new policyowner?

Answer 14

the VSP is the new policyowner and beneficiary

Question 15

if disabled, the waiver of premiums still allows for ___ growth

Answer 15

cash value

Question 16

what is the tax treatment upon policy surrender?

Answer 16

upon policy surrender, the cash value that exceeds total premiums paid would be considered taxable

Question 17

when does the settlement option become available to the beneficiary?

Answer 17

upon the death of the insured

Question 18

what are the cash value options available to policyowners upon policy surrender?

Answer 18

non-forfeiture options

Question 19

what is another name for the death benefit on a AD&D policy?

Answer 19

the principle sum or amount

Question 20

dividends paid on life insurance policies are received ___ and are never ___

Answer 20

tax-free, never guaranteed

Question 21

what is the surrender for cash benefit?

Answer 21

a nonforfeiture option whereby the owner surrenders the policy for its cash value

Question 22

name the three nonforfeiture benefits

Answer 22

surrender for cash, extended level term, and reduced paid-up permanent insurance

Question 23

the payor rider is added to a ____ policy for an additional ____

Answer 23

the payor rider is added to a childs policy for an additional premium

Question 24

requiring an additional premium, riders added to a life insurance policy must be purchased ____

Answer 24

at the time of application

Question 25

if someone has any paid-up permanent additions, what is payable upon death?

Answer 25

the paid-up permanent additions, in addition to the death benefit on the original policy

Question 26

an accelerated benefit may provide for ___ if the insured is confined to a nursing home

Answer 26

long-term care

Question 27

In a universal life insurance policy, what is the waiver of premium provision called?

Answer 27

the waiver of cost provision

Question 28

upon disability, a life insurer may waive the premium obligation after ___ months of disability

Answer 28

6 months

Question 29

describe the paid-up permanent insurance option

Answer 29

this option provides for a smaller permanent life insurance policy requiring no further premiums

Question 30

what are the advantages of selling a contract to a VSP?

Answer 30

a larger living benefit and being free from federal taxes

Question 31

what is probably the simplest and most common settlement option used?

Answer 31

cash or lump-sum payment

Question 32

what is the result of a life settlement?

Answer 32

a policy owner sells his existing life insurance policy to a third party

Question 33

T or F: double or triple indemnity may be used to describe the AD&D death benefit

Answer 33

true

Question 34

T or F: in an insurer is to retain the death benefit, an interest rate will be paid on these assets.

Answer 34

true

Question 35

what is a stranger-originated life insurance policy? (STOLI)

Answer 35

a policy that is purchased by a third party with no insurable interest in the insured.

Question 36

Which settlement option indicates the beneficiary is most concerned with receiving a specific monthly dollar amount?

Answer 36

fixed amount

Question 37

what dividend option provides an additional benefit for a limited period of time?

Answer 37

the one-year term option

Question 38

settlement options may be selected by ___ but altered by a ___ upon death of the ____

Answer 38

selected by the policyowners, altered by a beneficiary upon the death of the insured.

Question 39

what rider increases the death benefit to offset an increase in the CPI?

Answer 39

the cost of living adjustment (COLA) rider

Question 40

in a life settlement, which party remains the same after the actual transfer of ownership occurs?

Answer 40

the insured party remains the same

Question 41

what additional rider increases the life insurance death benefit by an amount equal to the total policy premiums paid?

Answer 41

the return of premium rider

Question 42

what is another name of the accelerated benefits rider?

Answer 42

the living needs rider

Question 43

if a person is disabled, life insurance premiums are waived once the insured is totally disabled for ___ months.

Answer 43

6 months

Question 44

accelerated benefits often require the insured to be ____ with a life expectancy of ___ to ___ months

Answer 44

terminally ill, 12 to 24 months

Question 45

T or F: A portion of the benefit provided by either fixed amount or fixed period will be taxable interest.

Answer 45

true

Question 46

benefits received through the accelerated benefits rider will ____ the future death benefit.

Answer 46

reduce

Question 47

is the waiver of premium rider optional or mandatory?

Answer 47

optional. the waiver of premium rider must be added at the time of application by paying an additional premium.

Question 48

someone who has a very short life expectancy can expect a larger or smaller purchase price when selling to a VSP?

Answer 48

larger

Question 49

T or F: a time limit exists to purchase additional life protection without required evidence of insurability

Answer 49

true - the guaranteed insurability (GI) rider usually limits this to age 40 or 50

Question 50

which settlement option allows interest to be paid on all the retained death benefit?

Answer 50

the interest only option

Question 51

what rider uses an increasing term policy rider to pay an additional DB equal to the base policy's existing cash value?

Answer 51

the return of cash value rider

Question 52

what is the name of the individual who sells her policy to a VSP?

Answer 52

a viator

Question 53

Are death benefits taxable when received by the beneficiary?

Answer 53

no, death benefits are not taxable

Question 54

if ___ the proceeds received from a VSP sale are received tax-free

Answer 54

terminally ill

Question 55

what nonforfeiture option continues to provide an identical death benefit upon policy surrender?

Answer 55

the extended leven term option

Question 56

which option is more flexible-- fixed period or fixed amount?

Answer 56

fixed amount

Question 57

what nonforfeiture option continues to provide permanent insurance protection in a smaller face amount?

Answer 57

the paid-up permanent insurance option

Question 58

the dividend option is used to gradually increase the overall death benefit as a possible inflation offset

Answer 58

the paid-up permanent additions option

Question 59

identify the acronym: AD

Answer 59

accidental death & Dismemberment

Question 60

a family term rider is added to a policy issued to the family ____

Answer 60

breadwinner

Question 61

Insurance policy dividends are received ___, while interest earned on dividends is ______

Answer 61

tax-free, taxable

Question 62

what rider is added to a policy and will provide a term insurance death benefit on the spouse or children?

Answer 62

a dependent rider

Question 63

what type of insurance is used to provide dependent coverage using a family term rider?

Answer 63

level term insurance

Question 64

identify the acronym: VSP

Answer 64

viatical settlement provider

Question 65

dividends are paid to policyholders of a ___ company

Answer 65

mutual

Question 66

the AD&D rider is generally ____ because it only protects against _____

Answer 66

inexpensive, accidental losses

Question 67

policies sold to a VSP are said to have gone through _____

Answer 67

viatication

Question 68

if the premium payor dies, premiums on a child's policy may be waived until the child reaches age ___

Answer 68

21

Question 69

what is the name of the company that purchases existing life insurance policies from an existing policyowner?

Answer 69

viatical settlement provider

Question 70

what a nonforfeiture option continues to provide an identical amount of insurance protection for a limited period?

Answer 70

the extended level term option

Question 71

for the principal benefit to be paid under an AD&D policy, death must occur within ____ days following the accident.

Answer 71

90 days

Question 72

benefits received form an accelerated benefit are not taxable if the insured is ____

Answer 72

terminally ill

Question 73

T or F: Waiver means a voluntary abandonment of an existing right

Answer 73

true

Question 74

what name is synonymous for the waiver of premium rider in a UL policy?

Answer 74

cost of insurance rider