Life Insurance Policies Chapter 3 Flashcards

Questions and Answers

Past-due interest on a policy loan is added to the total debt.

True

How much will D's beneficiary receive from a $100,000 Whole Life policy with a War Exclusion clause if D was killed while on leave?

The full face amount

An insured's inability to perform two or more activities of daily living may trigger which type of policy rider?

Long term care

All of these statements concerning Settlement Options are true EXCEPT:

Only the beneficiary may select Signup and view all the answers

How do life insurance companies handle cases where the insured commits suicide within the contract's stated Contestable period?

Claims are denied under the Suicide clause of the policy Signup and view all the answers

What action will an insurer take if an interest payment on a policy loan is not made on time?

Automatically add the amount of interest due to the loan balance Signup and view all the answers

Additional coverage can be added to a Whole Life policy by adding which rider?

Decreasing term rider Signup and view all the answers

What provision in a life insurance policy states that the application is considered part of the contract?

Entire Contract provision Signup and view all the answers

What is the purpose of the Suicide provision in a life insurance policy?

Safeguard the insurer from an applicant who is contemplating suicide Signup and view all the answers

If D's ex-wife is the beneficiary of a $50,000 life insurance policy and D transfers ownership to his new wife, who will the policy proceeds be paid to if D dies?

Ex-wife Signup and view all the answers

Which type of life insurance allows the policyowner to have level premiums and choose from a selection of investment options?

Variable Life Signup and view all the answers

Which life insurance rider typically appears on a Juvenile life insurance policy?

Payor Benefit rider Signup and view all the answers

What is the purpose of the automatic premium loan provision in life insurance policies?

Avoid a policy lapse Signup and view all the answers

In a life insurance policy, what feature states that the policy will not cover certain risks?

Exclusion Signup and view all the answers

When does a Guaranteed Insurability Rider allow the insured to buy additional coverage?

At future dates specified in the contract with no evidence of insurability required Signup and view all the answers

If S buys a $50,000 whole life policy with a $50,000 Accidental Death and Dismemberment rider and dies one year later of natural causes, how much will the insurer pay the beneficiary?

$50,000 Signup and view all the answers

A young, married teacher wants an increasing Death Benefit to protect against inflation. What Dividend Option should the teacher select?

Paid-Up Additional Insurance Signup and view all the answers

Study Notes

Life Insurance Policy Provisions and Options

Policy loans require that past-due interest is added to the total debt.
A War Exclusion clause in a Whole Life policy does not affect the payout if the insured is killed in an automobile accident while on leave.
Long term care riders are triggered by the insured's inability to perform two or more activities of daily living.
Settlement Options can be selected by the policyowner, not solely by the beneficiary.
Life insurance claims for suicides within the contestable period are denied based on the Suicide clause.
If a policy loan's interest payment is missed, the insurer will add the unpaid interest to the loan balance.
A decreasing term rider can be added for additional coverage on a Whole Life policy.
The Entire Contract provision states that the policy, application, and any riders make up the entire agreement.
The Suicide provision is designed to protect insurers from applicants considering suicide.
In the case of divorce, the ex-spouse remains the beneficiary unless officially changed, even with ownership transfer.
Variable Life insurance offers level premiums while allowing policyowners investment options.
The Payor Benefit rider on Juvenile policies waives premiums if the adult-payor dies or becomes disabled.
The Waiver of Premium provision does not require eligibility for Social Security disability for claims—this is incorrect.
The automatic premium loan provision helps prevent lapses in coverage on a policy.
Exclusions in a policy refer to specific risks that the insurance will not cover.
The Guaranteed Insurability Rider allows buying additional coverage specified in the contract without proof of insurability.
If insured with an Accidental Death rider dies from natural causes, the full policy payout is made ($50,000).
To protect against inflation with an increasing Death Benefit, choosing Paid-Up Additional Insurance as a Dividend Option is advisable.

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Test your knowledge on life insurance policies, including their provisions, options, and riders. These flashcards cover key concepts such as policy loans and exclusivity clauses, preparing you for exam success in this critical area of insurance knowledge.