Questions and Answers
What does the absolute assignment of a life insurance policy result in?
All incidents of ownership transferred to the assignee
How is the insured protected if a payor benefit rider is attached to the life insurance policy?
Premium payments are waived in the event the premium payor dies or becomes disabled
What does a life insurance policy with an accelerated (living) benefit rider provide funds for?
If the insured is expected to be confined to a nursing home for life
Which of these would NOT be a valid reason to add the waiver of premium rider to a life insurance policy?
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What effect can a long-term care benefit rider have on a life insurance policy?
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How is a collateral assignment used in a life insurance contract?
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What happens to a life insurance policy when the policy loan balance exceeds the cash value?
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How long can an insurer legally defer paying the cash value of a surrendered life insurance policy?
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What type of insurance is provided by the extended term life nonforfeiture option?
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What potential does a lapsed policy's premium have when it has been paid current?
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How can the automatic premium loan provision be accurately described?
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Which life insurance policy is eligible to include an automatic premium loan provision?
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What is payable to the policy owner if a whole life policy is surrendered prior to its maturity date?
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The insured must be disabled for a period of time to receive a waiver of premium benefit.
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Civil insurrections apply to the war exclusion in life insurance policies.
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What source of supplemental income can a life insurance policy owner derive from?
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What is accurate regarding the extended term insurance nonforfeiture option in a life policy?
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What ensures that Scott's life insurance policy may be paid up when the cash value plus accumulated dividends equal the net single premium?
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How much will be paid to the beneficiary from a life insurance policy that includes a return of premium rider upon the insured's death?
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Cash payment is directly provided to the policy owner under the waiver of premium rider.
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What type of life insurance rider is designed to help pay for expenses if an individual is confined to a nursing home but does not have a terminal illness?
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How may an insurance company classify an accidental death benefit on a life policy?
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What happens as a result of the absolute assignment of a life insurance policy?
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What benefit is normally payable to a life insurance policy owner when the insured's life expectancy has been severely limited?
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What will the insurance company pay if a policy owner listed their age as 5 years younger than actual age at the time of death?
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Which of the following is NOT guaranteed in a whole life policy?
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The life insurance premium for a children's rider remains the same no matter how many children are added.
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What is a life insurance policy provision that has the ability to reduce the death benefit?
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Which dividend option would be chosen for a limited current outlay of funds?
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What does a life insurance guaranteed insurability rider give the insured the right to do without proving insurability?
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Study Notes
Life Insurance Policy Assignments
- Absolute assignment transfers all ownership rights of the policy to the assignee.
- Collateral assignment transfers specific ownership rights to a creditor.
Riders and Benefits
- A payor benefit rider waives premium payments if the payor dies or becomes disabled.
- An accelerated (living) benefit rider provides funds if the insured is expected to need lifelong nursing home care.
- The long-term care benefit rider is designed to cover expenses for nursing home care without a terminal illness.
- Accidental death benefits can be classified as optional policy riders.
Policy Loans and Cash Value
- If the policy loan balance exceeds the cash value, the policy becomes void.
- Insurers can legally defer cash value payments on a surrendered policy for up to six months.
- A whole life policy can include an automatic premium loan provision, facilitating premium payment after the grace period.
Nonforfeiture Options
- The extended term life nonforfeiture option offers level term coverage for a specific period.
- The cash value of a whole life policy is payable upon surrender before its maturity date.
- The premium for extended term insurance is derived from the policy's cash value.
Premium and Dividends
- A waiver of premium requires the insured to be disabled for a specific period to qualify.
- In a misstatement of age situation, the insurance payout may be less than the face amount.
- Whole life policies do not guarantee the dividend scale, but premiums for a children's rider remain constant regardless of the number of children.
Riders Affecting Death Benefits
- An accelerated benefit rider reduces the death benefit available upon the insured's death.
- A return of premium rider offers the total premiums paid plus the face amount upon the insured's death.
Reinstatement and Policy Lapse
- A lapsed whole life policy can potentially be reinstated if the premium has been paid current.
- Automatic premium loans help cover premium payments to prevent lapsing during the grace period.
Additional Information
- Dividends can be used to reduce premium payments for limited current financial outlay.
- A guaranteed insurability rider allows purchasing additional insurance without proving insurability.
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Description
Test your knowledge with these flashcards on life insurance concepts from Chapter 4. Each card focuses on key terms and definitions that are essential for understanding life insurance policies, including ownership transfers and rider benefits. Perfect for exam preparation and quick reviews!
