Questions and Answers
Whose life is covered on a life insurance policy that contains a payor benefit clause?
Child
Which of these types of policies may NOT have the Automatic Premium Loan provision attached to it?
The option that provides an additional death benefit for a limited amount of time at the lowest possible cost is called a(n):
Accidental Death and Dismemberment (AD&D) rider
How much will the insurer pay the beneficiary if S dies 1 year after purchasing a $50,000 whole life policy with an accidental death and dismemberment rider?
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A Whole Life insurance policyowner does NOT have the right to:
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What will the insurer pay to P's beneficiary if P dies in a scuba-related accident after lying on the application?
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What action will the insurer take if N dies without making the required premium payment?
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What kind of rider is attached to a life insurance policy that ensures the premium will be paid if the insured becomes disabled?
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A policy loan is made possible by which of these insurance policy features?
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What provision in a life insurance policy states that the application is considered part of the contract?
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When is the face amount of a Whole Life policy paid?
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Which statement made by the producer would be correct if a client wants a Whole Life policy that accumulates cash value faster?
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What benefits does the Payor clause on a Juvenile Life Policy provide?
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A Term Life rider offers the insured:
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Which statement is TRUE in regards to a policy loan?
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The purpose of the ______ Period clause is to avoid an unintentional lapse of a life insurance policy.
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In a life insurance policy, which provision states who may select policy options, designate and name a beneficiary, and be the recipient of any financial benefits from the policy?
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Which of these types of life insurance allows the policyowner to have level premiums and to choose from a selection of investment options?
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A Nonforfeiture clause gives the policyowner:
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Which of these provisions require proof of insurability after a policy has lapsed?
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What action is taken when a policyowner uses a Life Insurance policy as collateral for a bank loan?
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In a life insurance policy, which feature states that the policy will not cover certain risks?
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P is blinded in an industrial accident. Which provision of his life insurance policy will pay a stated benefit amount?
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All of the following statements are true regarding a policy's Grace period, EXCEPT:
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A provision in a life insurance policy that pays the policyowner an amount that does not surpass the guaranteed cash value is called the:
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Accumulated interest earned on dividends from an insurance policy is taxed as ordinary income.
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Which of the following provisions guarantees that premiums will be waived if a juvenile Life policyowner becomes disabled?
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What action can a policyowner take if an application for a bank loan requires collateral?
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Dividends paid from a life insurance policy are:
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The consideration clause in a life insurance contract contains what pertinent information?
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A cost of Living rider gives the insured:
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What does the ownership clause in a life insurance policy state?
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Which of the following statements about accumulated interest earned on dividends from an insurance policy is TRUE?
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M has an insurance policy with an outstanding policy loan at the time of M's death. The insurer will pay the full policy proceeds to the beneficiary.
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What does the insuring agreement in a Life insurance contract establish?
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B owns a Whole Life policy with a guaranteed insurability option that allows him to purchase, without evidence of insurability, stated amounts of:
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An insured's inability to perform two or more activities of daily living may trigger which type of policy rider?
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Typically, a life insurance death benefit is paid by a lump-sum payment. A(n) ________ option is a method of distributing a life insurance policy's death benefit OTHER than by a lump sum payment.
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Which of the following statements is CORRECT about accelerated death benefits?
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The automatic premium loan provision is designed to:
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The ______ is authorized to assign a life insurance policy as collateral for a loan.
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Which of the following nonforfeiture options offers the highest death benefit?
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Additional coverage can be added to a Whole Life policy by adding a(n):
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Study Notes
Life Insurance Policies
- A life insurance policy with a payor benefit clause ensures premiums are waived if the payor, usually a parent, becomes disabled, providing coverage for a child.
- Decreasing term policies typically do not include an Automatic Premium Loan provision.
- The Accidental Death and Dismemberment (AD&D) rider offers a temporary additional death benefit at a low cost.
- Whole life policies allow for cash value accumulation, with options like 20-Pay Life accumulating faster than Straight Life.
Claims and Benefits
- Beneficiaries of whole life policies receive the face amount upon the insured's death or at policy maturity, whichever occurs first.
- If an insured dies during the grace period, the full face amount is paid minus any overdue premiums.
- The policy will not cover claims if premiums are not paid, as seen with term life policies.
Policy Features
- Policy loans are permitted through the cash value provision, allowing the policy owner access to funds.
- Features like the Waiver of Premium rider provide premium payment waivers if the policyowner becomes disabled.
- The Insuring Clause outlines the insurer's obligation to pay benefits defined in the agreement.
Exclusions and Limitations
- Exclusions in life insurance policies specify certain risks that are not covered, affecting claims processing in specific circumstances.
- Claims may be contested during the contestable period if material misrepresentations are discovered on the application.
Riders and Additional Provisions
- The Child Term rider provides coverage for children under the parent's life insurance policy.
- Long Term Care riders offer daily benefits if the insured is unable to perform two or more activities of daily living.
- The Guaranteed Insurability Rider allows policyowners to purchase additional coverage without evidence of insurability at specified future dates.
Dividends and Tax Implications
- Dividends from life insurance policies can be used for various options, such as paid-up additions, and may incur tax liabilities on accumulated interest.
- Policy loans against cash value may be deferred for up to six months for repayment or surrender.
Nonforfeiture Options
- Nonforfeiture options like Extended Term and Reduced Paid-Up provide policy owners with guaranteed values or coverage even if the original policy lapses.
- The Automatic Premium Loan enables policies to avoid lapsing due to missed premium payments by deducting from the cash value.
Assignment and Ownership Rights
- The policyowner holds rights to assign the policy as collateral for loans, change beneficiaries, and make adjustments within legal scope.
- In cases of divorce, benefits may still go to the ex-spouse unless changes have been made to the policy ownership.
Contestable Clauses and Coverage Adjustments
- Policies can be contested during the contestable period if suicide occurs or material misrepresentations are made.
- Adjustments in death benefits due to age misstatements are made in accordance with the Misstatement of Age provision.
Payment Methods and Settlement Options
- Payment methods, when the claim is made, include lump-sum payments or settlement options for distributing death benefits over time.
- Accelerated death benefits require proof of terminal illness and can be requested prior to death under set conditions.
Summary
- Understanding the intricacies of life insurance policies and their respective riders, exclusions, and benefits is crucial for optimizing coverage and ensuring claims are honored.
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Description
This quiz explores various aspects of life insurance policies, including payor benefit clauses, claims, and policy features. It covers the differences between term and whole life policies and the benefits offered by additional riders like AD&D. Test your knowledge of how these policies function and their key features.
