Podcast
Questions and Answers
Which of the following is true about the mandatory free look in a life insurance policy?
Which of the following is true about the mandatory free look in a life insurance policy?
The automatic premium loan provision is activated at the end of the?
The automatic premium loan provision is activated at the end of the?
All of the following are TRUE statements regarding the accumulation at interest option EXCEPT?
All of the following are TRUE statements regarding the accumulation at interest option EXCEPT?
An insured stops making payments on a loan taken from his cash value policy. What will most likely happen?
An insured stops making payments on a loan taken from his cash value policy. What will most likely happen?
Signup and view all the answers
The Waiver of Cost of Insurance rider is found in what type of insurance?
The Waiver of Cost of Insurance rider is found in what type of insurance?
Signup and view all the answers
All of the following are beneficiary designations EXCEPT?
All of the following are beneficiary designations EXCEPT?
Signup and view all the answers
If the policyowner, the insured, and the beneficiary under a life insurance policy are three different people, who has the ownership rights?
If the policyowner, the insured, and the beneficiary under a life insurance policy are three different people, who has the ownership rights?
Signup and view all the answers
Which policy provision allows an insured to reactivate a lapsed life insurance policy?
Which policy provision allows an insured to reactivate a lapsed life insurance policy?
Signup and view all the answers
Which nonforfeiture option has the highest amount of insurance protection?
Which nonforfeiture option has the highest amount of insurance protection?
Signup and view all the answers
Which is true about a spouse term rider?
Which is true about a spouse term rider?
Signup and view all the answers
Regarding the free-look provision, the insurance company?
Regarding the free-look provision, the insurance company?
Signup and view all the answers
The law states that an insurer is allowed to pay the entire Death Benefit to the insured if they qualify to use the Accelerated Death Benefit Rider; however, most insurers limit the amount of the Death Benefit paid to?
The law states that an insurer is allowed to pay the entire Death Benefit to the insured if they qualify to use the Accelerated Death Benefit Rider; however, most insurers limit the amount of the Death Benefit paid to?
Signup and view all the answers
The paid-up addition option uses the dividend to?
The paid-up addition option uses the dividend to?
Signup and view all the answers
When the insured selects the extended term nonforfeiture option, the cash value will be used to purchase term insurance with what face amount?
When the insured selects the extended term nonforfeiture option, the cash value will be used to purchase term insurance with what face amount?
Signup and view all the answers
Which of the following named beneficiaries would NOT be able to receive the death benefit directly from the insurer in the event of the insured's death?
Which of the following named beneficiaries would NOT be able to receive the death benefit directly from the insurer in the event of the insured's death?
Signup and view all the answers
Study Notes
Life Insurance Policy Provisions
- Mandatory Free Look Provision: Begins when the policy is delivered, allowing policyholders to examine and return it for a full premium refund if dissatisfied.
- Automatic Premium Loan Provision: Activated at the end of the grace period to keep the policy in force if sufficient cash value exists.
- Accumulation at Interest Option: Interest credited is taxable even if not withdrawn; policyholder can withdraw accumulations at any time.
- Loan Policy Termination: If a policyholder doesn't repay a loan, the policy may terminate when the loan amount and accrued interest meet or exceed the cash value.
Riders and Coverage Options
- Waiver of Cost of Insurance Rider: Found in Universal Life policies; waives insurance costs during the insured's disability, excluding costs for cash value accumulation.
- Beneficiary Designations: Includes primary and contingent (secondary/tertiary) designations; "specified" is not a recognized category.
- Reinstatement Provision: Lapsed policies can be reinstated within 3 years by paying back premiums with interest and providing proof of insurability.
Nonforfeiture Options and Riders
- Extended Term Nonforfeiture Option: Provides the same face amount as the original policy for a shorter duration; offers the highest insurance protection among nonforfeiture options.
- Spouse Term Rider: Typically level term insurance, allows spouse coverage that expires at age 65.
Policy Conditions and Legal Aspects
- Free-Look Provision Requirements: Insurers must allow a return for a full premium refund within a specified period (typically 10 days) after the policyholder receives it.
- Accelerated Death Benefit Rider: While the law permits up to the entire death benefit to be advanced, most insurers cap it at 50%.
Options for Dividends and Policy Management
- Paid-Up Addition Option: Dividends are used to buy additional smaller amounts of the same insurance type, enhancing the policy's benefits.
- Cash Value Usage in Extended Term Option: Cash value is used to purchase term insurance equal to the original policy for the duration that the cash value allows.
Beneficiary Considerations
- Ineligible Benefit Recipients: A minor son of the insured cannot directly receive the death benefit; benefits are typically managed through a guardian or trustee in such cases.
Studying That Suits You
Use AI to generate personalized quizzes and flashcards to suit your learning preferences.
Description
Test your knowledge on life insurance policy provisions, options, and riders. This quiz covers important concepts such as the mandatory free look provision and its implications. Perfect for students or professionals in the insurance industry.
