Policy Provisions, Riders And Options

Question 1

What happens to the proceeds of a life insurance policy if there’s no name beneficiary?

Answer 1

Proceeds are paid to the insureds estate

Question 2

What nonforfeiture option is automatically selected by the company if not chosen by the policy owner?

Answer 2

Extended term

Question 3

Under what nonforfeiture option does the company pay the policy’s surrender value and have no further obligations to the policy owner?

Answer 3

Cash Surrender

Question 4

What type of beneficiary can be changed at any point by the policyowner?

Answer 4

Revocable

Question 5

What provision allows the policyowner to reactivate a lapsed life insurance policy within a specified period of time with proof of insurability?

Answer 5

Reinstatement

Question 6

When will a contingent beneficiary receive death benefits from a life insurance policy?

Answer 6

When the primary beneficiary dies before the insured

Question 7

What nonforfeiture option provides coverage for the longest period of time?

Answer 7

Reduced paid-up

Question 8

What provision in a life insurance policy extends coverage beyond the premium due?

Answer 8

Grace period

Question 9

what is the purpose of the Automatic Premium Loan Provision?

Answer 9

Prevent unintentional lapse of a policy

Question 10

To meet the requirement of the entire contract policy provision, an insurance policy must contain what?

Answer 10

Copy of original insurance application

Question 11

What are dividend options in life insurance policies?

Answer 11

cash, reduced premium, accumulation at interest, paid-up additions, paid-up option, one-year term, and acceleration of endowment

Question 12

What beneficiary designation has first claim death proceeds of a life insurance policy?

Answer 12

Primary Beneficiary

Question 13

What settlement option are available in life insurance?

Answer 13

Lump-sum/cash, fixed period, fixed amount, life income, interest only

Question 14

What life insurance policy provisions prevents an insurer from disrupting or denying a claim due to misrepresentations on the applications after a certain period of time?

Answer 14

Incontestability

Question 15

What is the purpose of settlement options in life insurance policies?

Answer 15

Determining how death benefit will be paid to beneficiary

Question 16

What does the term double indemnity mean?

Answer 16

Insurer will pay benefit twice the face amount

Question 17

Is the beneficiary required to have insurable interest in the insured?

Answer 17

No, beneficiary’s don’t have insurable interest in the insured.

Question 18

What can an insurance company use suicide as a defense against paying a death claim?

Answer 18

When a suicide is committed within 2 years after policy is purchased

Question 19

What type of beneficiary is next in line after primary beneficairy?

Answer 19

Contingent beneficiary

Question 20

What dividend option is automatically selected by the company if not chosen by the policyowner?

Answer 20

paid-up additions

Question 21

With the interest only settlement option, what happens to the policy’s death benefit?

Answer 21

Policy proceeds are retained by the insurance company; only the interest is paid to the beneficiary

Question 22

In the fixed-period settlement option, how will the number of installments for the death benefit proceeds determine the amount of the installments?

Answer 22

Longer period selected, smaller each installment will be

Question 23

Insurer has discovered a representation on a life insurance policy regarding the insureds age. The insured is 10 years older than he stated on the application. what will the insurer do regarding the death benefit?

Answer 23

Pay a reduced death benefit

Question 24

What life policy allows the company to forgo collecting the premium if the insured becomes disabled?

Answer 24

Waiver of premium

Question 25

What life policy provision states that both the policy and a copy of thre application form the contract between the policy owner and the insurer?

Answer 25

Entire contract

Question 26

What is the name for a life insurance poly rider that provides coverage on the insureds family members?

Answer 26

Other-insured rider

Question 27

What are policy dividends?

Answer 27

Return of unused premiums

Question 28

With the reduction of premium dividend option, how is the dividend used?

Answer 28

Dividend is applied to reduces next years premium

Question 29

If a settlement option is not chosen by the policyowner or beneficiary, what option will be used by the insurer?

Answer 29

Lump-sum payment

Question 30

An applicant for life insurance misstated her age on the policy application. How will this affect the death benefit?

Answer 30

Death benefit will be adjusted to the amount to her correct age

Question 31

Who controls changes in premium payments, face values, and loans in a life insurance policy?

Answer 31

Policyowner

Question 32

Who has the right to the cash value of a life insurance?

Answer 32

Policyowner

Question 33

What happens to a policy's cash value under an extended term nonforfeiture option?

Answer 33

Cash vale is converted to the same face amount as in the whole life policy

Question 34

What are the most common exclusions in life insurance policies?

Answer 34

War, military service, hazardous occupation and aviation

Question 34

what is the purpose of a free-look period?

Answer 34

Allow the insured to return the policy with refund

Question 35

Which of the two types of policy assignments requires transfer of all ownership rights in the policy to a third party?

Answer 35

Absolute assignment

Question 36

What are the three nonforfeiture options in life insurance policies?

Answer 36

Cash surrender, reduced paid-up and extended term

Question 37

What is the advantage of reinstating a life insurance policy as opposed to applying for a new one?

Answer 37

Premium in a reinstated policy will be used to insureds original age

Question 38

What dividend option can increase the death benefit of the existing life policy?

Answer 38

Paid-up additions

Question 39

What nonforfeiture option provides coverage for the longest period of time?

Answer 39

Reduced paid-up

Question 40

What type of assignment is used to secure the payment of a debt with an existing life insurance policy?

Answer 40

Collateral assignment

Question 41

A policyowner borrowed a portion a cash value from his whole life policy. If the loan is not repaid, how will that affect the death benefit to the beneficiary?

Answer 41

Amount of loan will be subtracted from the death benefit

Question 42

What required provision protects against unintentional policy lapse?

Answer 42

Grace period

Question 43

What term is used to escribe methods of payment of the death benefit to the beneficiary upon insureds death?

Answer 43

Settlement options

Question 44

What is the purpose of settlement options in life insurance policies?

Answer 44

Determine how death benefit will be paid to the beneficiary