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Exam 12: Life Insurance Contractual Provisions

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Question 1

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All of the following statements about the requirements to reinstate a lapsed life insurance policy are true EXCEPT

A) Evidence of insurability is required.
B) The lapse must have resulted from other than the surrender of the policy for its cash value.
C) All overdue premiums must be paid along with interest from the premium due dates.
D) There is no time limit on when the policy may be reinstated.

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Question 2

Multiple Choice

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All of the following are nonforfeiture options found in cash value life insurance policies EXCEPT

A) cash value.
B) reduction of premiums.
C) reduced paid-up insurance.
D) extended term insurance.

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B

Question 3

Multiple Choice

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A contingent beneficiary in a life insurance policy has the right to

Becky is considering the purchase of a whole life policy on her own life.She is concerned that if she becomes disabled,paying premiums will become a burden.Which provision can Becky attach to her life insurance policy to address this concern?

Which of the following statements about the assignment of a life insurance policy is true?

Which of the following statements regarding the accidental death benefit rider (also known as double indemnity) is true?

Life insurance policy proceeds can be paid to a trustee upon the death of the insured.All of the following statements about having the proceeds paid to a trustee are true EXCEPT

Which of the following would be a valid reason for an insurer to contest a policy after the contestable period has ended?

All of the following are requirements that must be satisfied before premiums are waived under a waiver-of-premium provision EXCEPT

Which of the following statements is true regarding an automatic premium loan provision?

Malcolm would like to purchase life insurance.He is concerned that he might need additional life insurance in the future and that he might be uninsurable at that time.What provision can Malcolm add to his life insurance policy that will permit him to purchase additional life insurance at specified times in the future without providing evidence of insurability?

Which of the following statements about the grace period in a whole life insurance contract is (are) true? I.The purpose of the grace period is to prevent the policy from lapsing by giving the policyowner additional time to pay an overdue premium. II.If the insured dies during the grace period,the death benefit is reduced by 50 percent.

Which of the following statements about beneficiary designations is (are) true? I.The primary beneficiary is entitled to the death proceeds of a life insurance policy only if the contingent beneficiary dies before the insured. II.If a revocable beneficiary designation is used,the insured must obtain the beneficiary's permission of exercise most policy rights.

Advantages of selecting the paid-up additions dividend option in a life insurance policy include which of the following? I.Evidence of insurability is not required to purchase additional insurance. II.The additions are purchased at net rates without a loading for expenses.

What major feature distinguishes a participating policy from a nonparticipating policy?

Which of the following statements about dividend options is (are) true? I.The interest on dividends left to accumulate with the insurer is not considered to be taxable income. II.Paid-up additions are additional units of whole life insurance.

Lionel purchased a $200,000 ordinary life insurance policy when he was 25 years old and had significant life insurance needs.Now Lionel is 50.His mortgage is almost paid-off and his children have left home and are financially independent.Lionel no longer wants to pay premiums,but he would like to have some permanent life insurance in force.Which nonforfeiture option could Lionel employ to meet these objectives?

All of the following statements about the interest settlement option are true EXCEPT

Which life insurance policy provision specifies that it is the policyholder,and not the insured or beneficiary,who possesses all contractual rights while the policy is in force?

Bruce lied about his health history when he purchased a life insurance policy.He died 3 years after the policy was issued.Which life insurance policy provision will require the life insurer to pay the beneficiary even though Bruce lied on the application?