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Questions and Answers
Which of these provisions require proof of insurability after a policy has lapsed?
Which of these provisions require proof of insurability after a policy has lapsed?
- Reinstatement (correct)
- Insuring
- Conversion
- Consideration
The Consideration clause in a life insurance policy indicates that a policyowner's consideration consists of which of the following?
The Consideration clause in a life insurance policy indicates that a policyowner's consideration consists of which of the following?
- The initial premium (correct)
- Agreeing to a physical examination
- Disclosure of any medical conditions
- Delivery of policy
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?
- Disallow any further loans
- Subtract from any dividends owed
- Automatically add the amount of interest due to the loan balance (correct)
- Cancel the policy if not paid within the grace period
When an insurer issues a policy that refuses to cover certain risks, this is referred to as a(n)
When an insurer issues a policy that refuses to cover certain risks, this is referred to as a(n)
Which provision prevents an insurer from changing the terms of the contract with the policyowner by referring to documents not found within the policy itself?
Which provision prevents an insurer from changing the terms of the contract with the policyowner by referring to documents not found within the policy itself?
The incontestable clause allows an insurer to?
The incontestable clause allows an insurer to?
Which of these is NOT considered to be a right given to a policyowner?
Which of these is NOT considered to be a right given to a policyowner?
T took out a $50,000 life insurance policy with an Accidental Death and Dismemberment rider. Five years later, T commits suicide. How much will the insurer pay?
T took out a $50,000 life insurance policy with an Accidental Death and Dismemberment rider. Five years later, T commits suicide. How much will the insurer pay?
B owns a Whole Life policy with a guaranteed insurability option that allows him to purchase, without evidence of insurability, stated amounts of?
B owns a Whole Life policy with a guaranteed insurability option that allows him to purchase, without evidence of insurability, stated amounts of?
P purchases a $50,000 term life insurance policy in 2005. What will the insurer pay to P's beneficiary given a scuba-related death?
P purchases a $50,000 term life insurance policy in 2005. What will the insurer pay to P's beneficiary given a scuba-related death?
S buys a $10,000 Whole Life policy in 2003 and pays an annual premium of $100. What kind of rider did S include on the policy?
S buys a $10,000 Whole Life policy in 2003 and pays an annual premium of $100. What kind of rider did S include on the policy?
D was actively serving in the Marines when he was killed in an automobile accident. His $100,000 Whole life policy contains a War Exclusion clause. How much will D's beneficiary receive?
D was actively serving in the Marines when he was killed in an automobile accident. His $100,000 Whole life policy contains a War Exclusion clause. How much will D's beneficiary receive?
In a Life insurance contract, an insurance company's promise to pay stated benefits is called the?
In a Life insurance contract, an insurance company's promise to pay stated benefits is called the?
N is covered by a Term Life policy and does not make the required premium payment due on August 1. N dies on September 15. What action will the insurer take?
N is covered by a Term Life policy and does not make the required premium payment due on August 1. N dies on September 15. What action will the insurer take?
What does the insuring agreement in a Life insurance contract establish?
What does the insuring agreement in a Life insurance contract establish?
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Study Notes
Life Insurance Policies: Provisions, Options, and Riders
- Reinstatement provisions require proof of insurability if a policy lapses.
- The Consideration clause includes the initial premium as part of the policyowner's commitment.
- If a policy loan's interest payment is missed, it will be added to the loan balance.
- An insurer's exclusion refers to refusal to cover specified risks in a policy.
Contractual Provisions
- The Entire Contract provision prohibits any changes in the contract terms based on documents outside the policy.
- The incontestable clause enables an insurer to contest a claim within the contestable period.
- A policyowner does not have the right to modify a provision in their insurance contract.
Claim Payments
- If a policyholder commits suicide, the insurer will pay the face value of the policy, which is $50,000.
- Guaranteed insurability options in Whole Life policies allow for additional coverage without proof of insurability at specified times.
- If a policyholder dies from an activity they did not disclose, such as scuba diving, the insurer pays the policy amount minus outstanding loans.
Riders and Benefits
- A Return of Premium rider guarantees the beneficiary will receive returned premiums plus a benefit at the time of death.
- The full face amount will be paid if the insured dies while actively serving in the military, despite any War Exclusion clause.
- The Insuring clause defines the insurance company's promise to provide the benefits stated in the policy.
Claim Denials and Rights
- Claims can be denied if premium payments are missed prior to the policyholder's death.
- The insuring agreement establishes the basic promise made by the insurer, underscoring obligations within the policy.
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