Prepare to Pass Chapter Quizzes

Question 1

A term life rider offers the insured

Answer 1

additional life coverage

Question 2

An insured’s inability to perform two or more activities of daily living may trigger which type of life policy rider?

Answer 2

long term care

Question 3

The purpose of the ___________ period is to avoid an unintentional lapse of a life insurance policy.

Answer 3

grace

Question 4

Which of these statements about a Guaranteed Insurability Option rider is NOT TRUE?

Answer 4

Evidence of insurability is required when the option is exercised

Question 5

J let her life insurance policy lapse 8 months ago due to nonpayment. She can reestablish coverage under which of the following provisions?

Answer 5

reinstatement provision

Question 6

M has an insurance policy that also has an outstanding policy loan at the time of M’s death. The insurer will deduct the outstanding loan balance from the…

Answer 6

policy proceeds

Question 7

What action can a policyowner take if an application for a bank loan requires collateral?

Answer 7

assign policy ownership to the bank

Question 8

An insurer may normally delay the payment of a cash value loan or surrender value for up to…

Answer 8

6 months

Question 9

A Nonforfeiture clause gives the policyowner…

Answer 9

guaranteed values even if the policy has lapsed

Question 10

The provision that can be used to put an insurance policy back in force after it has lapsed due to nonpayment is called…

Answer 10

reinstatement

Question 11

P is the insured on a participating life policy. Which statement is true if P’s premiums are waived due to a disability?

Answer 11

P will still receive declared dividends.

Question 12

A long-term care rider in a life insurance policy pays a daily benefit in the event of which of the following?

Answer 12

Inability of the insured to perform more than 2 Activities of Daily Living (ADL’s)

Question 13

B recently died and was insured with a life insurance policy for over five years. During the claims process, the insurer discovered that B had understated his age by 5 years at the time of application. In this situation, the insurer will…

Answer 13

pay the amount that the premium would have purchased at the correct age

Explanation: The Misstatement of Age provision states an adjustment be made in the amount of insurance if the age of the insured is misstated.

Question 14

What does the ownership clause in a life insurance policy state?

Answer 14

Who the policyowner is and what rights the policyowner is entitled to

Question 15

Variable Whole Life Insurance can be described as

Answer 15

both an insurance and securities product

Question 16

A return of premium life insurance policy is…

Answer 16

whole life and increasing term

Explanation: If the insured dies within the period of term, the beneficiary will receive face amount plus the value of all paid premiums.

Question 17

Typically a life insurance death benefit is paid by a lumpsum payment. A(n) __________ option is a method of distributing a Life Insurance policy’s death benefit OTHER than by lump sum payment.

Answer 17

settlement

Question 18

A Whole Life insurance policyowner does NOT have the right to…

Answer 18

change the grace period

Question 19

A policy loan is made possible by the which of these life insurance policy features?

Answer 19

cash value provision

Question 20

Which type of life policy contains a monthly mortality charge as well as self-directed investment choices?

Answer 20

Variable Universal Life

Question 21

Which of the following statements is CORRECT about accelerated death benefits?

Answer 21

Must have a terminal illness to qualify

Question 22

The consideration clause in a life insurance contract contains what pertinent information?

Answer 22

Amount of premium payments and when they are due