Questions and Answers
A waiver of premium rider allows an insured to waive premium payments if the insured is?
Which of the following is NOT a common life insurance policy rider?
A policyowner may exercise which of these dividend options that uses the dividend to pay all or part of the next premium due?
If an insured's age on a life insurance policy has been misstated, what is the insurer's liability if the insured dies?
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What is the name of the provision which states that a copy of the application must be attached to the policy when issued?
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A provision that allows a policyowner to temporarily give up ownership rights to secure a loan is called a(n)?
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Of the following dividend options, which of these is taxable?
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Joanne has a $100,000 whole life policy with an accumulated $25,000 of cash value. She would like to borrow $15,000 against the cash value. Which of the following statements is TRUE?
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Life insurance policies will normally pay for losses arising from?
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A provision in a whole life policy that allows a policyowner to terminate the policy in return for a reduced paid-up policy of the same type is called a(n)?
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A whole life insurance policy accumulates cash value that becomes?
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An error was made on Mary's life insurance application. Which of the following areas do errors commonly occur on applications and for which the incontestable clause does NOT apply?
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A life insurance policy normally contains a provision that restricts coverage in the event of death under all of the following situations EXCEPT?
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What does the guaranteed insurability option allow an insured to do?
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Loans obtained by a policyowner against the cash value of a life insurance policy?
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Study Notes
Waiver of Premium Rider
- Waives premium payments when the insured is completely and permanently disabled.
Life Insurance Policy Riders
- Extended term is not a common life insurance policy rider; common ones include automatic premium loan, waiver of premium, and accidental death.
Dividend Options
- Reduction of premium dividend option allows policyowners to use dividends to pay all or part of the next premium due.
Misstatement of Age
- If an insured's age is misstated, the insurer owes a prorated death benefit based on correct premiums corresponding to the insured's true age.
Entire Contract Provision
- States that a copy of the application must be attached to the policy when issued.
Collateral Assignment
- Allows a policyowner to temporarily give up ownership rights to secure a loan against the policy.
Taxable Dividend Options
- Accumulation at interest is the only taxable dividend option among reduction of premium, one-year term, and paid-up additions.
Policy Loans
- Net death benefit will be reduced if a loan against cash value is not repaid; loans can be taken against the policy within its cash value limit.
Coverage Restrictions
- Life insurance generally covers losses from commercial aviation but excludes claims related to war, suicide, and hazardous jobs.
Nonforfeiture Provision
- Allows a policyowner to terminate a whole life policy in exchange for a reduced paid-up policy of the same type.
Cash Value of Whole Life Policies
- Accumulates cash value, which serves as the policy loan value available for insureds to borrow against.
Incontestable Clause and Errors
- Errors on applications often occur with age, but the incontestable clause does not apply to those errors.
Coverage Limitations
- Life insurance typically restricts coverage in the event of death under circumstances like pilot of a personal airplane and war but covers fare-paying passengers.
Guaranteed Insurability Option
- Allows an insured to purchase additional coverage without requiring evidence of insurability.
Tax Implications of Policy Loans
- Loans taken against the cash value of a life insurance policy are not treated as taxable income.
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Description
Test your knowledge on chapter 4 of insurance concepts, focusing on policy provisions, options, and riders. This quiz will help reinforce key terms and definitions related to insurance riders and their implications. Perfect for exam preparation.
