Podcast
Questions and Answers
What does the free-look provision give the policyowner?
What does the free-look provision give the policyowner?
The right to return the policy for a full refund within a specified number of days.
Which dividend option would the insurer invest the policyowner's money and add any interest earning as the dividends accrue?
Which dividend option would the insurer invest the policyowner's money and add any interest earning as the dividends accrue?
What will be payable to Matt's beneficiary if Matt dies instantly from a car accident with a double indemnity rider?
What will be payable to Matt's beneficiary if Matt dies instantly from a car accident with a double indemnity rider?
Double indemnity benefit.
A life insurance policy normally contains a provision that restricts coverage in the event of death under all of the following situations EXCEPT:
A life insurance policy normally contains a provision that restricts coverage in the event of death under all of the following situations EXCEPT:
Signup and view all the answers
What is the term for a whole life policy option where extended term insurance is selected?
What is the term for a whole life policy option where extended term insurance is selected?
Signup and view all the answers
Which military service exclusion clause would pay upon Kurt's death if he was an active-duty serviceman killed while on leave?
Which military service exclusion clause would pay upon Kurt's death if he was an active-duty serviceman killed while on leave?
Signup and view all the answers
What allows a policyowner to withdraw a policy's cash value interest free?
What allows a policyowner to withdraw a policy's cash value interest free?
Signup and view all the answers
What is a reinstatement condition in life insurance?
What is a reinstatement condition in life insurance?
Signup and view all the answers
What will be the death benefit amount if James's age was misstated on the life insurance application?
What will be the death benefit amount if James's age was misstated on the life insurance application?
Signup and view all the answers
Which are considered nonforfeiture options available to a policyowner EXCEPT:
Which are considered nonforfeiture options available to a policyowner EXCEPT:
Signup and view all the answers
Which are standard exclusions found in a life insurance policy EXCEPT:
Which are standard exclusions found in a life insurance policy EXCEPT:
Signup and view all the answers
What right does a life insurance policyowner NOT have?
What right does a life insurance policyowner NOT have?
Signup and view all the answers
Which of these are common exclusions to a life insurance policy EXCEPT:
Which of these are common exclusions to a life insurance policy EXCEPT:
Signup and view all the answers
If an insured and the beneficiary die from the same accident, what does the common disaster provision state?
If an insured and the beneficiary die from the same accident, what does the common disaster provision state?
Signup and view all the answers
What must the insured provide to activate the reinstatement clause of a lapsed life insurance policy?
What must the insured provide to activate the reinstatement clause of a lapsed life insurance policy?
Signup and view all the answers
In which area do errors commonly occur on life insurance applications and for which the incontestable clause does NOT apply?
In which area do errors commonly occur on life insurance applications and for which the incontestable clause does NOT apply?
Signup and view all the answers
What is the term used when ownership of a life insurance policy is temporarily transferred?
What is the term used when ownership of a life insurance policy is temporarily transferred?
Signup and view all the answers
How are loans obtained by a policyowner against the cash value of a life insurance policy treated?
How are loans obtained by a policyowner against the cash value of a life insurance policy treated?
Signup and view all the answers
What is a provision that allows a policyowner to temporarily give up ownership rights to secure a loan?
What is a provision that allows a policyowner to temporarily give up ownership rights to secure a loan?
Signup and view all the answers
What is a life insurance rider that allows an individual to purchase insurance as they grow older, regardless of insurability?
What is a life insurance rider that allows an individual to purchase insurance as they grow older, regardless of insurability?
Signup and view all the answers
What dividend option allows a policyowner to use dividends to pay all or part of the next premium due?
What dividend option allows a policyowner to use dividends to pay all or part of the next premium due?
Signup and view all the answers
What allows a policyowner to terminate the policy in return for a reduced paid-up policy of the same type?
What allows a policyowner to terminate the policy in return for a reduced paid-up policy of the same type?
Signup and view all the answers
What does the cash value of a whole life insurance policy become?
What does the cash value of a whole life insurance policy become?
Signup and view all the answers
Which of these is NOT considered to be a common life insurance nonforfeiture option?
Which of these is NOT considered to be a common life insurance nonforfeiture option?
Signup and view all the answers
What limits a company's liability to provide insurance coverage?
What limits a company's liability to provide insurance coverage?
Signup and view all the answers
What period allows an insurer to accept a late premium and continue coverage?
What period allows an insurer to accept a late premium and continue coverage?
Signup and view all the answers
Which of these is NOT considered to be a nonforfeiture option in a whole life insurance policy?
Which of these is NOT considered to be a nonforfeiture option in a whole life insurance policy?
Signup and view all the answers
Which of these is NOT a characteristic of the Accelerated Death Benefit option?
Which of these is NOT a characteristic of the Accelerated Death Benefit option?
Signup and view all the answers
What protects a policyowner from a misrepresentation caused by an innocent mistake?
What protects a policyowner from a misrepresentation caused by an innocent mistake?
Signup and view all the answers
What type of rider will waive the premium on a child's life insurance policy if the parent paying the premium dies?
What type of rider will waive the premium on a child's life insurance policy if the parent paying the premium dies?
Signup and view all the answers
Which rider would pay a monthly amount due to total and permanent disability?
Which rider would pay a monthly amount due to total and permanent disability?
Signup and view all the answers
What is an insurance policy's grace period?
What is an insurance policy's grace period?
Signup and view all the answers
If Ron has a life insurance policy worth $100,000.00 and the consumer price index increases by 4%, how much may he increase the face value of the policy?
If Ron has a life insurance policy worth $100,000.00 and the consumer price index increases by 4%, how much may he increase the face value of the policy?
Signup and view all the answers
Life insurance policies will normally pay for losses arising from what?
Life insurance policies will normally pay for losses arising from what?
Signup and view all the answers
Which of the following is considered an alternative to a life settlement?
Which of the following is considered an alternative to a life settlement?
Signup and view all the answers
What is true about a 20-pay life policy with a paid-up dividend option owned by Pat?
What is true about a 20-pay life policy with a paid-up dividend option owned by Pat?
Signup and view all the answers
Which of these dividend options is taxable?
Which of these dividend options is taxable?
Signup and view all the answers
What is an insurer required to do when faced with a misstatement of age?
What is an insurer required to do when faced with a misstatement of age?
Signup and view all the answers
Study Notes
Life Insurance Provisions and Riders
- Free-look provision allows policyowners to return the policy for a full refund within a specified number of days.
- Accumulation at interest option invests policyowner's money, adding interest to dividends.
- Double indemnity rider pays a benefit to the beneficiary if the insured dies instantly from a car accident.
- Coverage restrictions may apply in certain situations, allowing coverage for fare-paying passengers.
- Nonforfeiture options allow policy surrender for a reduced paid-up policy, using cash value.
Military Service and Exclusions
- The "results clause" in military exclusions states that insurers are excused from paying benefits only if death is war-related.
- Common exclusions include hazardous occupations, aviation, and war, with disability as an exception.
Policyowner Rights and Benefits
- Policyowners cannot revoke an absolute assignment.
- In case of a common disaster where the insured and beneficiary die simultaneously, the insurer assumes the insured outlived the beneficiary.
- To activate a reinstatement clause for a lapsed policy, evidence of insurability is required from the insured.
Application Errors and Assignments
- Errors on life insurance applications commonly occur in stating age; the incontestable clause does not apply here.
- Collateral assignment allows temporary transfer of policy ownership to secure a loan.
Tax Implications and Payments
- Loans against a life insurance policy's cash value are not treated as taxable income.
- Payments during the grace period ensure coverage remains in force despite a late premium payment.
Nonforfeiture and Dividend Options
- Nonforfeiture provisions include cash surrender, extended term insurance, and reduced paid-up options.
- Reduction of premium dividend option allows dividends to pay part or all of the next premium due.
- Accelerated death benefit options can be offered at no additional cost, unlike other riders which might require extra payment.
Special Riders and Adjustments
- Payor benefit rider waives the premium on a child’s policy if the premium-payer dies.
- Disability Income Rider pays a monthly amount if the insured becomes totally and permanently disabled.
- Cost of living rider allows an increase in policy face value based on CPI adjustments.
Miscellaneous Provisions
- Grace period is the time after a premium is due when the policy remains active.
- Accumulation at interest dividend options are taxable, unlike other nonforfeiture options, which generally aren't.
- Insurers are required to adjust benefits to age-corrected amounts under the Misstatement of Age provision.
Studying That Suits You
Use AI to generate personalized quizzes and flashcards to suit your learning preferences.
Description
Test your knowledge on life insurance provisions, riders, and policyowner rights with this comprehensive quiz. Explore topics ranging from the free-look provision to military service exclusions and understand how they affect policy benefits. Perfect for those studying insurance principles!
