Questions and Answers
What kind of rider did S include on the policy?
Which of the following would NOT be a factor in determining how much coverage can be purchased with dividends?
Which of the following statements about accumulated interest earned on dividends from an insurance policy is true?
Which provision of P's life insurance policy will pay a stated benefit amount after he is blinded in an industrial accident?
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Accidental Death and Dismemberment provision in a life insurance policy would pay additional benefits if the insured:
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M's insurer will deduct the outstanding loan balance from which of the following at the time of M's death?
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Which feature would limit the insurer's obligation if N was killed while flying as a student pilot?
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What action can a policyowner take if an application for a bank loan requires collateral?
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The automatic premium loan provision is designed to:
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The incontestable clause allows an insurer to:
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How much will D's beneficiary receive under the War Exclusion clause given that D was killed in an automobile accident while serving in the Marines?
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Additional coverage can be added to a Whole Life policy by adding a(n):
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Which of these types of policies may NOT have the Automatic Premium Loan provision attached to it?
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What action may an insurance company take if a misrepresentation on a life insurance policy application is discovered?
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Which of these types of life insurance allows the policyowner to have level premiums and to also choose from a selection of investment options?
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What does the ownership clause in a life insurance policy state?
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When an insurer issues a policy that refuses to cover certain risks, this is referred to as a(n):
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Study Notes
Policy Riders and Benefits
- A Return of Premium Rider allows policyholders to receive a refund of premiums paid if they pass away, exemplified by an insured who bought a $10,000 Whole Life policy and passed away after 5 years, receiving $10,500.
- Dividends from life insurance can be used for paid-up additions, but the beneficiary's age does not affect the amount of coverage purchased.
- Accumulated interest on dividends from a policy is taxed as ordinary income.
Provisions and Clauses
- The Accidental Death and Dismemberment Clause pays a stated benefit for severe injuries, such as blindness due to an accident.
- Insurers will deduct any outstanding loan balance from policy proceeds at the time of the insured's death.
- A War Exclusion clause in life insurance can result in beneficiaries receiving nothing if an insured dies while actively serving in the military.
Loans and Collateral
- A policyowner can assign ownership of the policy to the bank as collateral for a loan.
- The automatic premium loan provision prevents policy lapses by using the cash value of the policy to cover missed premiums.
Contestability and Misrepresentation
- The Incontestable Clause restricts insurers from contesting claims during the contestable period unless due to misrepresentation.
- Insurers can void a policy during the contestable period if a misrepresentation is found, specifically if it is material.
Types of Policies
- Variable Life Insurance allows policyholders to leverage level premiums while selecting from various investment options.
- Certain policies, such as decreasing term insurance, cannot have the automatic premium loan provision attached.
Exclusions and Limitations
- Exclusions limit insurance obligations by explicitly stating which risks are not covered.
- The ownership clause defines the rights of the policyowner regarding the policy and insurance contracts.
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Description
Test your knowledge with these flashcard-style exam questions focused on Chapter 4.2 of life insurance concepts. Explore various riders and their definitions to solidify your understanding in this critical area of insurance. Ideal for students preparing for exams or professionals seeking a refresher.
