Life Insurance Policies - Lesson 4
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Questions and Answers

What is an Insuring Clause?

Appears on the first page of the contract and summarizes all the main points of the contract like the promise to pay death benefit.

Who typically signs the insuring clause?

President and secretary of the company.

What are the owner's rights provisions? (Select all that apply)

  • Can change the beneficiary (correct)
  • The beneficiary has rights in the contract
  • Can borrow cash value (correct)
  • Can receive dividends (correct)

    • What is the Free Look Provision?

    <p>Generally 10 days after policy delivery to cancel policy with full refund, except 30 days for seniors or for replacement policies.</p> Signup and view all the answers

    What does the Consideration Clause state?

    <p>In life insurance, this states that the policy owner's consideration consists of completing the application and paying the initial premium.</p> Signup and view all the answers

    What is a Grace Period Provision?

    <p>Coverage remains in effect for 31 days past the premium due date; benefits paid during grace period would be deducted from the sum.</p> Signup and view all the answers

    What is term life insurance?

    <p>Temporary life insurance provided for a specific period of time; aka pure life insurance.</p> Signup and view all the answers

    What is Pure Death Protection?

    <p>If the insured dies during this term, the policy pays the death benefit to the beneficiary; if the policy is canceled or expires, nothing is payable.</p> Signup and view all the answers

    What are the three basic types of term coverage? (Select all that apply)

    <p>Decreasing</p> Signup and view all the answers

    What is Level Term Insurance?

    <p>The most common type of temporary protection that pays the same death benefit over the term of the policy.</p> Signup and view all the answers

    What is Decreasing Term Insurance?

    <p>Term insurance in which the annual premium remains constant but the face amount declines each year.</p> Signup and view all the answers

    What is Increasing Term Insurance?

    <p>Pays an increasing death benefit and has increasing premiums as the policyholder ages.</p> Signup and view all the answers

    What is Renewable Term Insurance?

    <p>Gives the policyholder the right to renew each year without having to pass a physical exam.</p> Signup and view all the answers

    What is Convertible Term Insurance?

    <p>A term policy that can be converted to a permanent type of coverage without proof of insurability.</p> Signup and view all the answers

    If Rob purchased a standard whole life policy with a $500,000 death benefit at age 30 and died at age 60, what would the death benefit be?

    <p>$500,000</p> Signup and view all the answers

    What is the automatic continuance of insurance coverage referred to as?

    <p>Renewal</p> Signup and view all the answers

    What product allows Jonas, a whole life insurance policyowner, to add coverage for his two children?

    <p>Child Term Rider</p> Signup and view all the answers

    How can a single premium cash value policy be described?

    <p>A policy that is paid up after only one payment</p> Signup and view all the answers

    Which type of life insurance is normally associated with a Payor Benefit rider?

    <p>Juvenile Insurance</p> Signup and view all the answers

    A partial surrender is allowed in which of the following life policies?

    <p>Universal Life</p> Signup and view all the answers

    What types of life insurance are normally used for key employee indemnification?

    <p>Term, Whole, and Universal Life Insurance</p> Signup and view all the answers

    Study Notes

    Life Insurance Policies Overview

    • Insuring Clause summarizes key aspects of the contract, including the "promise to pay" death benefit.
    • Typically signed by the company's president and secretary.

    Owner's Rights Provisions

    • Allows policy owner to change the beneficiary and borrow against cash value.
    • Owner can select premium payment modes, receive dividends, and has assignment rights.
    • Beneficiaries do not have rights in the contract.

    Free Look and Consideration Provisions

    • Free Look Provision: 10 days to cancel the policy for a full refund; extended to 30 days for seniors and replacement policies.
    • Consideration Clause requires the policy owner to complete the application and pay the initial premium.

    Grace Period

    • Grace Period Provision extends coverage for 31 days past the premium due date.
    • Benefits paid within this period will be deducted from the total payout.

    Term Life Insurance

    • Provides temporary life insurance for a specific period, offering the highest coverage for the lowest premium.
    • Lacks cash value or living benefits; only pays death benefits if the insured passes within the term.

    Types of Term Coverage

    • Basic types include level, increasing, and decreasing term coverage.

    Level Term Insurance

    • Most common, paying a consistent death benefit throughout the policy term.

    Decreasing Term Insurance

    • Constant annual premium, with a declining face amount.
    • Commonly used to secure mortgage payments; death benefit becomes zero at term end.

    Increasing Term Insurance

    • Offers an escalating death benefit, correlating with rising premiums as the policyholder ages.

    Renewable and Convertible Term Insurance

    • Renewable Term Insurance allows annual renewal without physical exams.
    • Convertible Term Insurance can be switched to permanent coverage without proof of insurability.

    Whole Life Insurance Concepts

    • Example: Rob's policy has a $500,000 death benefit; if he dies at 60, the payout would be $500,000.
    • Renewal refers to automatic continuance of coverage.

    Riders and Additional Coverage

    • Child Term Rider allows policyholder to add coverage for children.
    • Single Premium Cash Value Policy is fully paid with a single payment.
    • Payor Benefit Rider is associated with juvenile insurance.

    Policy Options and Partial Surrenders

    • Universal Life Insurance permits partial surrenders.
    • Key employee indemnification typically uses term, whole, and universal life insurance.

    Modified Whole Life Premiums

    • Premiums for Modified Whole Life policies are higher than standard whole life policies for initial years.

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    Description

    This quiz covers key concepts from Lesson 4 of life insurance, focusing on insuring clauses, ownership rights, and provisions associated with life insurance policies. Test your understanding of how these components influence insurance contracts and policies.

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