Life Insurance Policy Provisions

Question 1

Is a grace period a required provision?

Answer 1

Yes

Question 2

A woman listed as a man on an application will probably receive a ________ benefit at death.

Answer 2

higher

Question 3

What percentage of premium must be returned to the policyowner if a policy is returned during the free-look period?

Answer 3

100% of the premiums paid

Question 4

Who selects how often a policy premium is paid?

Answer 4

The policyowner

Question 5

Which beneficiary designation means per family line or lineage?

Answer 5

The per stirpes beneficiary designation

Question 6

Taking a cash value policy loan __________ create a taxable event

Answer 6

does not

Question 7

__________ is the transfer of policy rights to another party.

Answer 7

Assignment

Question 8

What is the most common life insurance policy exclusion?

Answer 8

War

Question 9

Policy loan interest is due each year on the ________ anniversary date.

Answer 9

policy

Question 10

List some examples of policyowner rights.

Answer 10

Name/change a beneficiary, select premium mode, receive dividends, take loans against the contract, and assign benefits

Question 11

First-in-line beneficiaries are also known as _______, second-in-line as __________, and third-in-line as ________.

Answer 11

First-in-line beneficiaries are also known as PRIMARY, second-in-line as CONTINGENT, and third-in-line as TERTIARY.

Question 12

Explain the Simultaneous Death Act (Common Disaster).

Answer 12

The assumption that the primary beneficiary died prior to the insured when both die in a common accident.

Question 13

A grace period is designed to prevent the ________________ lapse of a policy.

Answer 13

unintentional

Question 14

What right does the APL option provide to the insurer?

Answer 14

The right to borrow from the cash value to pay overdue premium

Question 15

Is interest paid on a policy loan tax-deductible?

Answer 15

No

Question 16

The maximum loan value is equal to the ____________ minus any projected __________.

Answer 16

The maximum loan value is equal to the CASH VALUE minus any projected INTEREST.

Question 17

If no beneficiary is listed, policy benefits will be paid to the insured’s _________.

Answer 17

estate

Question 18

What would a parent use to change ownership of a child’s policy?

Answer 18

An absolute assignment

Question 19

What type of assignment is used to secure a loan?

Answer 19

A collateral assignment

Question 20

What is another name for the transfer of ownership?

Answer 20

Assignment

Question 21

Only an ________________ of an _______ is provided the authority to make or waive a policy provision.

Answer 21

Only an APPROVED of an INSURER is provided the authority to make or waive a policy provision.

Question 22

A fixed interest rate of no more than ___% may be assessed on a policy loan.

Answer 22

8%

Question 23

True or False: Everyone attempting to reinstate a policy within 3 years of its lapse date will be accepted.

Answer 23

False

Question 24

Suicide is covered once the policy has been issued for ____ years.

Answer 24

2 years

Question 25

Beginning on the policy delivery date, the free look provision must be provided for no less than ____ days.

Answer 25

10 days

Question 26

Explain the concept of absolute assignment.

Answer 26

The transfer of all policy rights to another

Question 27

What clause allows an insurer to pay a portion of the death benefit to an individual who paid for funeral expenses?

Answer 27

The Facility of Payment Clause

Question 28

A _____________ is a trust listed in a person's will.

Answer 28

testamentary

Question 29

What is the APL option designed to prevent?

Answer 29

The unintentional lapse of a policy

Question 30

Which provision allows an insurer to charge a service fee for the collection of premium?

Answer 30

The Payment of Premium provision

Question 31

Which payment mode would be the least expensive over the course of a year?

Answer 31

The annual payment mode

Question 32

What clause is a summary of the entire contract and is usually found on the first or face page of the contract?

Answer 32

The Insuring clause

Question 33

True or False: Any immediate family member may take a loan out against a person's insurance policy.

Answer 33

False. Only the policyowner has the right to take a loan out against a policy.

Question 34

When would the APL option be activated?

Answer 34

Following the expiration of the grace period

Question 35

What happens to a policy if the premium is not paid during the grace period?

Answer 35

It will lapse for nonpayment of premium.

Question 36

A _______ is usually established when benefits are payable to a minor.

Answer 36

A trust is usually established when benefits are payable to a minor.

Question 37

_____________________ is the transfer of some, but not all, policy rights to another party.

Answer 37

Collateral assignment

Question 38

What are the four common modes of premium payment?

Answer 38

Annual, semiannual, quarterly, and monthly

Question 39

True or False: A whole life to term conversion with the same company does not require evidence of insurability.

Answer 39

False. Conversion from whole life to term will always require evidence of insurability.

Question 40

Name some common policy exclusions.

Answer 40

War, private aviation, suicide (first 2 years), dangerous hobbies or occupations, and criminal acts

Question 41

If an insured's age is misstated, what will eventually happen to any future claim?

Answer 41

The benefit will be adjusted to reflect the misstated age.

Question 42

Understating age on a life application will mean a _______ death benefit will be paid.

Answer 42

lower

Question 43

What does per capita beneficiary depiction mean?

Answer 43

It means per person or per head

Question 44

Death by suicide is not covered during the first ___ years of policy issue.

Answer 44

2 years

Question 45

Which beneficiary depiction may not be changed without permission from the beneficiary?

Answer 45

An irrevocable beneficiary depiction

Question 46

The _________ war exclusion only excludes benefits if death is the direct result of battle.

Answer 46

results

Question 47

Any policy modifications must be endorsed by the _________ and __________ to the policy.

Answer 47

Any policy modifications must be endorsed by the INSURER and ATTACHED to the policy.

Question 48

List two examples of an owner's right.

Answer 48

The right to change beneficiary or premium payment mode

Question 49

True or False: Beneficiary listings may be changed by the insurer using a change of beneficiary form.

Answer 49

False. The policyowner, not the insurer, may change the beneficiary.

Question 50

nefit proceeds left to an insured's estate will be decided by a _________ court.

Answer 50

probate

Question 51

Within a contract, where does an insurer make its promise to pay benefits?

Answer 51

In the Insuring Clause

Question 52

What is another name for the free-look provision?

Answer 52

The 10-Day Right to Examine

Question 53

How long is a grace period?

Answer 53

No less than 31 days

Question 54

Which type of policy type allows for cash value loans--term or whole life?

Answer 54

Whole life

Question 55

Which type of trust is created during the life of the insured?

Answer 55

An inter vivos trust

Question 56

True or False: The entire contract provision is a mandatory provision.

Answer 56

True

Question 57

dentify the acronym: APL

Answer 57

Automatic Premium Loan

Question 58

If death occurs with an outstanding policy loan, what is subtracted from the death benefit?

Answer 58

The remaining amount of the loan plus any accrued interest

Question 59

What two items constitute an applicant's consideration?

Answer 59

Application information and initial premium

Question 60

Do beneficiaries have contractual rights to a contract?

Answer 60

No

Question 61

Does a beneficiary have any owner's rights?

Answer 61

No

Question 62

Define the term consideration.

Answer 62

An exchange of values between two parties

Question 63

The transfer of all policy rights to another party is referred to as ___________________.

Answer 63

absolute assignment.

Question 64

What provision requires an adjustment in benefits if the insured's age has been improperly recorded?

Answer 64

The Misstatement of Age provision

Question 65

When must the optional APL provision be selected?

Answer 65

At the time of application

Question 66

True or False: A term-to-term policy conversion with the same company does not require evidence of insurability.

Answer 66

True

Question 67

An insurer must respond to an applicant for reinstatement within ___ days of receiving the paperwork.

Answer 67

45 days

Question 68

Is an insured afforded coverage during the grace period?

Answer 68

Yes

Question 69

A policy is said to be _____________ after the contract has been issued for ___ or more years.

Answer 69

A policy is said to be INCONTESTABLE after the contract has been issued for 2 or more years.

Question 70

The minimum length of a free-look period is ____ days.

Answer 70

The minimum length of a free-look period is 10 days.

Question 71

How are monthly premiums generally paid?

Answer 71

Mark For Review71 of 75An electronic fund transfer through a person's bank

Question 72

How long does an insurer have to contest the validity of a claim based on false application information?

Answer 72

For two years following the issuance of the policy

Question 73

What is the name for an insurer's consideration to the applicant?

Answer 73

The warranty

Question 74

Would it be better to reinstate an existing policy or attempt to purchase a new policy?

Answer 74

Reinstate the original policy since premium is based on insured's age at issuance and may result in lower premiums.

Question 75

To whom is the interest earned on assets retained by an insurer taxed?

Answer 75

To the beneficiary