Questions and Answers
This person's policy includes a rider which allows her to purchase additional insurance at specific dates or events without evidence of insurability. What is this rider called?
If an insured's age on a life insurance policy has been misstated, what is the insurer's liability if the insured dies?
A prorated death benefit based on the amount of insurance the insured's premiums would have been if purchased at the correct age.
A life insurance rider that allows an individual to purchase insurance as they grow older, regardless of insurability, is called a(n):
Loans obtained by a policyowner against the cash value of a life insurance policy are treated as taxable income.
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What is NOT a valid policy dividend option for a life insurance policyowner?
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What is TRUE regarding the death benefit amount if a person's age was misstated on the application?
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A Guaranteed Issue Insurance policy has no medical underwriting.
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What does it mean if a policy has a paid-up dividend option?
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What is a whole life policy option where extended term insurance is selected called?
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What is an insurer required to do when faced with an error made under the Misstatement of Age provision?
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What is NOT a standard exclusion found in a life insurance policy?
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What dividend option is taxable?
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The double indemnity provision in a life insurance policy pertains to an insured's death caused by a(n):
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What applies when the policyowner's death occurs due to an accident?
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What is TRUE about borrowing against the cash value of a $100,000 whole life policy with an accumulated $25,000 of cash value?
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Which situation accurately describes a reduced paid-up nonforfeiture option?
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The automatic premium loan provision authorizes an insurer to withdraw from a policy's cash value the amount of:
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Ownership of a life insurance policy may be temporarily transferred with a(n):
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In order to activate the reinstatement clause of a lapsed life insurance policy, the insured MUST:
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What is NOT considered to be a common life insurance nonforfeiture option?
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What is the name of the provision which states that a copy of the application must be attached to the policy when issued?
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A life insurance policyowner injured in an automobile accident which results in a total and permanent disability would be covered by which rider?
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What is the purpose of having an accelerated death benefit on a life insurance policy?
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A rider that assures premiums will be paid on a juvenile policy until the child reaches a specific age is called a(n):
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A double indemnity benefit will be payable to the beneficiary if the insured dies instantly from a car accident.
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If an insured dies during the grace period with no premiums paid, what happens?
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What is NOT part of an insurance contract?
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Study Notes
Life Insurance Concepts
- A Guaranteed Insurability Rider allows policyholders to purchase additional insurance without proof of insurability at certain times.
- If an insured's age is misstated, the insurer pays a prorated death benefit based on what premiums would have been had the correct age been stated.
- Loans taken against a life insurance policy's cash value are not taxable income.
Policy Dividends and Options
- A common invalid policy dividend option is to accumulate without interest.
- A 20-Pay Life policy with a paid-up dividend option can be fully paid up early using dividends.
- Nonforfeiture Options include selecting extended term insurance for whole life policies.
Provisions and Riders
- The Double Indemnity Provision applies in cases where death is caused by an accident, leading to increased benefits.
- The automatic premium loan provision allows an insurer to use cash value to cover unpaid premiums.
- Collateral Assignment enables temporary transfer of policy ownership.
Reinstatement and Nonforfeiture
- Reinstating a lapsed policy requires the insured to provide evidence of insurability.
- Common nonforfeiture options do not include a Life Income Annuity.
- The Entire Contract provision mandates that the application be attached to the policy when issued.
Disability and Accelerated Benefits
- The Disability Income Rider provides monthly benefits to an insured who becomes totally and permanently disabled.
- An accelerated death benefit can be accessed if the insured is terminally ill, allowing cash payments against the death benefit.
Loans and Benefits
- A loan against a whole life policy decreases the net death benefit if not repaid.
- If an insured passes away during the grace period with unpaid premiums, the benefit payable will be the policy amount minus dues.
- The Payor Rider ensures premiums on a juvenile policy are paid until the child reaches a specific age.
Exclusions and Miscellaneous
- Standard exclusions in life insurance policies do not typically include disability.
- Accumulated interest from dividends is taxable.
- A double indemnity benefit is applicable when an insured dies instantly from an accident, ensuring extra protection for beneficiaries.
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Test your knowledge with these flashcards covering key concepts from Chapter 2 of Life Provisions. Each card features essential terms and definitions that are critical for understanding life insurance policies. Perfect for review or self-assessment!