Podcast
Questions and Answers
What action will the insurer take if N, who is covered by a Term Life policy, does not make the required premium payment and dies?
What action will the insurer take if N, who is covered by a Term Life policy, does not make the required premium payment and dies?
What is the provision that can be used to put an insurance policy back in force after it has lapsed due to nonpayment?
What is the provision that can be used to put an insurance policy back in force after it has lapsed due to nonpayment?
Reinstatement
How much will the insurance company pay K's beneficiary if K dies after paying on a $20,000 20-Year Endowment policy for 10 years?
How much will the insurance company pay K's beneficiary if K dies after paying on a $20,000 20-Year Endowment policy for 10 years?
$20,000 death benefit
How can additional coverage be added to a Whole Life policy?
How can additional coverage be added to a Whole Life policy?
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What does the incontestable clause allow an insurer to do?
What does the incontestable clause allow an insurer to do?
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What is referred to as the promise to pay stated benefits in a life insurance contract?
What is referred to as the promise to pay stated benefits in a life insurance contract?
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Which of these is NOT an example of a Nonforfeiture option?
Which of these is NOT an example of a Nonforfeiture option?
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All of the following statements are true regarding a policy's Grace Period EXCEPT which one?
All of the following statements are true regarding a policy's Grace Period EXCEPT which one?
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Which types of policies may NOT have the Automatic Premium Loan provision attached to them?
Which types of policies may NOT have the Automatic Premium Loan provision attached to them?
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Which feature would limit the insurer's obligation if N, a student pilot, was killed while flying?
Which feature would limit the insurer's obligation if N, a student pilot, was killed while flying?
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What will the beneficiary receive if the insured dies during the Grace Period?
What will the beneficiary receive if the insured dies during the Grace Period?
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Which statement is TRUE regarding a policy loan?
Which statement is TRUE regarding a policy loan?
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Which provisions require proof of insurability after a policy has lapsed?
Which provisions require proof of insurability after a policy has lapsed?
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How are surrender charges deducted in a life policy with a rear-end loaded provision?
How are surrender charges deducted in a life policy with a rear-end loaded provision?
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Which life insurance rider typically appears on a Juvenile life insurance policy?
Which life insurance rider typically appears on a Juvenile life insurance policy?
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What provision of a life insurance policy will pay a stated benefit amount if P is blinded in an industrial accident?
What provision of a life insurance policy will pay a stated benefit amount if P is blinded in an industrial accident?
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What is the purpose of the automatic premium loan provision?
What is the purpose of the automatic premium loan provision?
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What is the TRUE statement about accumulated interest earned on dividends from an insurance policy?
What is the TRUE statement about accumulated interest earned on dividends from an insurance policy?
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What is the purpose of the Suicide provision?
What is the purpose of the Suicide provision?
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Which statement regarding Whole Life policies is correct for a potential client age 40 wishing to accumulate cash value faster?
Which statement regarding Whole Life policies is correct for a potential client age 40 wishing to accumulate cash value faster?
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When does a Guaranteed Insurability Rider allow the insured to buy additional coverage?
When does a Guaranteed Insurability Rider allow the insured to buy additional coverage?
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What does the ownership clause in a life insurance policy state?
What does the ownership clause in a life insurance policy state?
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What action will an insurer take if an interest payment on a policy loan is not made on time?
What action will an insurer take if an interest payment on a policy loan is not made on time?
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What does the Consideration clause in a life insurance policy indicate?
What does the Consideration clause in a life insurance policy indicate?
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What is the term for the agreement in a life insurance contract that states a specific sum of money will be paid to a designated person upon an insured's death?
What is the term for the agreement in a life insurance contract that states a specific sum of money will be paid to a designated person upon an insured's death?
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Study Notes
Life Insurance Provisions and Options
- Non-payment of premium results in claim denial if the policy lapses before the insured's death.
- Reinstatement provision allows lapsed policies to be put back in force upon meeting certain conditions.
- The death benefit of a 20-Year Endowment policy remains at $20,000 if the insured dies during the policy term.
- Whole Life policies can have additional coverage through a decreasing term rider.
- Insurers may contest claims during the contestable period due to the incontestable clause.
Key Definitions
- The insuring clause is the insurer's commitment to pay the stated benefits upon the insured's death.
- Nonforfeiture options do not include Life Income.
- Grace Period rules do not cover payments of past due premiums.
- Automatic Premium Loan provisions cannot be attached to decreasing term policies.
Insurer Obligations and Provisions
- Exclusions may limit coverage for specific activities, such as flying while being a student pilot.
- If the insured dies during the Grace Period, the beneficiary receives the full face amount minus past due premiums.
- Past-due interest on policy loans increases the total debt but does not void the policy.
- Reinstatement of policy after lapse requires proof of insurability.
Policy Features and Riders
- Surrender charges apply when a policy is discontinued and are referred to as rear-end loaded provisions.
- Juvenile life insurance commonly includes a Payor Benefit rider.
- The Accidental Death and Dismemberment clause provides stated benefits for specific accidents.
Premium Payment and Taxation
- Automatic premium loans help avoid policy lapses.
- Accumulated interest on dividends from insurance policies is taxable as ordinary income.
- The Suicide provision protects insurers from potential losses due to applicants contemplating suicide.
Whole Life Policy Characteristics
- 20-Pay Life policies accumulate cash value more quickly than Straight Life policies.
- The Guaranteed Insurability Rider allows additional coverage purchase at specified future dates without proof of insurability.
- The ownership clause defines the policyowner's identity and rights.
Policy Loan and Consideration
- Any missed interest payment on a policy loan is added to the loan balance.
- The consideration clause details the policyowner's obligations, including the completed application and initial premium.
- The insuring agreement states the amount paid to a designated beneficiary upon the insured's death.
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Description
This quiz focuses on key concepts from Chapter 3 of life insurance, covering provisions, options, and riders. Test your knowledge on important terms such as policy lapses, reinstatement, and claim processes. Ideal for students and professionals in insurance and finance.
