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Questions and Answers
A waiver of premium rider allows an insured to waive premium payments if the insured is?
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?
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?
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?
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?
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)?
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?
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?
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?
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)?
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?
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?
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?
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?
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?
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.
