Life/Health Chapter 4 Flashcards

Questions and Answers

The entire contract typically consists of all of the following, except:

The policy itself

A copy of the cancelled check and receipt (correct)

A copy of the application

Any riders

A settlement option that guarantees a payment for a specified period of time and that liquidates both principal and interest is which of the following?

Life income fixed period

Interest only

Fixed Period (correct)

Fixed amount

What allows the owner to name the beneficiary, choose a dividend option or settlement option, or borrow against the contract?

Ownership Provision

If an insured commits suicide within the time specified by the suicide clause, the insurance company may do all of the following, except:

Refund to the beneficiary the amount of premiums and interest paid to date Signup and view all the answers

Most often, life policies pay death claims in a single lump sum. The options that allow benefits to be paid other than lump sum are called:

Settlement Options Signup and view all the answers

Tom elects the Life Income with a 10-year Period Certain settlement option. Tom dies in year 6. The beneficiary receives payments for:

4 years Signup and view all the answers

Dividends if declared are paid:

Annually Signup and view all the answers

What is the easiest and best way to assure that the life insurance policy's death proceeds don't end up in probate court process?

List a primary and contingent beneficiary by their full name and relationship to the insured Signup and view all the answers

George has named each of his three sons as per capita primary beneficiaries of a $30,000 life insurance policy. If all three sons are living at the time of George's death, which statement best describes the amount each will receive?

Each son receives $10,000 Signup and view all the answers

A partial withdrawal is considered:

A partial surrender of the policy Signup and view all the answers

Which of the following beneficiary designations prevents a policyholder from assigning the policy, taking a policy loan, or surrendering the policy without the beneficiary's consent?

Irrevocable Signup and view all the answers

The remaining proceeds of the insurance policy will be paid to:

Pebbles, in any manner she chooses Signup and view all the answers

The interest earned on dividends is:

Taxable Signup and view all the answers

Which of the following two documents always constitutes part of the entire contract?

The application and policy Signup and view all the answers

All of the following can determine the death benefit settlement option, except:

The insurer Signup and view all the answers

As a general rule, most insurance companies will allow the insured to change to another type of insurance policy without a medical examination if the:

New premium is higher than the original Signup and view all the answers

All of the following are life insurance policy prohibited provisions, except:

Voiding a policy for failing to repay any policy loan or loan interest when the total outstanding policy debt is greater than the policy's cash value Signup and view all the answers

Generally, an insurer may defer the granting of a policy loan for up to:

6 Signup and view all the answers

An insured allows a permanent policy to lapse. Unless otherwise instructed, the insurance company:

Will automatically institute the extended term option Signup and view all the answers

Each of the following is a source of life insurance policy dividends, except:

Guaranteed cash value accumulations Signup and view all the answers

The name of the beneficiary designation that will pay a deceased beneficiary's share to the heirs of that beneficiary who predeceases the insured is called:

Per stirpes Signup and view all the answers

If the premiums are not paid on a Traditional Whole Life policy that has been in force for decades with no loan outstanding, what happens?

Unless specified otherwise, the cash values buy extended term Signup and view all the answers

John is the insured. His wife Mary is the primary beneficiary. Their three children are the contingent beneficiaries. John and Mary are killed in a common accident. The proceeds of John's policy would be paid to:

The children Signup and view all the answers

What provision establishes that if both the insured and the primary beneficiary die in the same accident, and it cannot be determined who died first, the insured will be presumed to have survived the beneficiary?

Common Disaster Clause Signup and view all the answers

Z is the beneficiary of a life insurance policy. Rather than take a lump sum, Z wanted a lifetime payout. However, Z would feel bad if after he died, residual values were retained by the insurer rather than being paid out. Z should consider which of the following settlement options?

Life Refund Signup and view all the answers

What allows the owner to name the beneficiary, choose a dividend option or settlement option, or borrow against the contract?

Ownership Provision Signup and view all the answers

The factors that determine the amount of each payment under the fixed period settlement option are:

Length of the fixed period, face amount of the policy and interest Signup and view all the answers

If an insured commits suicide within the time specified by the suicide clause, the insurance company may do all of the following, except:

Refund to the beneficiary the amount of premiums and interest paid to date Signup and view all the answers

Which of the following correctly describes the effect of the Common Disaster Clause?

If an insured and primary beneficiary both are killed when the bus they are riding in goes over a cliff and if it cannot be determined who died first, the insured will be presumed to have survived the primary beneficiary so the contingent beneficiary will be able to receive the death proceeds Signup and view all the answers

The provision that limits the amount of time an insurer has to challenge a claim and void the contract upon proof of a material misstatement is called the ____________ clause.

Incontestability Signup and view all the answers

Study Notes

Contract and Policy Components

The entire insurance contract includes any riders, a copy of the application, and the policy itself.
A copy of the cancelled check and receipt is not typically included.

Settlement Options

Fixed Period settlement option liquidates both principal and interest for a specified time.
Life Income with a 10-year Period Certain option ensures payouts continue for the designated time even if the insured dies early.

Ownership and Beneficiary Provisions

Ownership Provision allows the policy owner to name beneficiaries and choose options related to dividends and borrowing.
Irrevocable beneficiary designations restrict policy owners from making changes without beneficiary consent.

Suicide Clause

Insurers have the right to refuse any death benefit, void the policy, or refund only the premium paid if the insured commits suicide within the specified timeframe.

Payment Options

Life insurance policies generally pay death claims as a single lump sum, but Settlement Options allow for alternative arrangements.
Dividends, if declared, are paid annually.

Beneficiary Designations and Claims

Naming primary and contingent beneficiaries effectively avoids probate court for insurance proceeds.
Per capita designations distribute equal shares among named beneficiaries, while per stirpes ensures deceased beneficiaries' shares go to their heirs.

Policy Features and Provisions

A partial withdrawal is classified as a partial surrender of the policy.
Cash values from a lapsed policy are typically used to purchase an extended term unless otherwise instructed.

Insurer’s Rights and Limitations

Insurers may defer policy loan granting for up to 6 months.
Insurers cannot void policies for non-repayment of loans if the outstanding debt exceeds the policy's cash value.

Death Benefits and Contingency

In the event of simultaneous deaths, the Common Disaster Clause assumes the insured survived the primary beneficiary, directing proceeds to contingent beneficiaries.
The factors influencing fixed period settlement amounts include the length of the period, face amount, and interest rates.

Tax Implications

The interest earned on dividends is taxable income.
Guaranteed cash value accumulations are not considered a source of dividends for policies.

Miscellaneous Provisions

Incontestability clauses limit the time frame for insurers to contest claims based on material misstatements.

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Test your knowledge on key concepts from Chapter 4 of the Life and Health course. These flashcards cover essential terms and definitions that are crucial for understanding insurance contracts and settlement options. Great for exam preparation!

Life/Health Chapter 4 Flashcards

Questions and Answers

The entire contract typically consists of all of the following, except:

A settlement option that guarantees a payment for a specified period of time and that liquidates both principal and interest is which of the following?

What allows the owner to name the beneficiary, choose a dividend option or settlement option, or borrow against the contract?

If an insured commits suicide within the time specified by the suicide clause, the insurance company may do all of the following, except:

Most often, life policies pay death claims in a single lump sum. The options that allow benefits to be paid other than lump sum are called:

Tom elects the Life Income with a 10-year Period Certain settlement option. Tom dies in year 6. The beneficiary receives payments for:

Dividends if declared are paid:

What is the easiest and best way to assure that the life insurance policy's death proceeds don't end up in probate court process?

George has named each of his three sons as per capita primary beneficiaries of a $30,000 life insurance policy. If all three sons are living at the time of George's death, which statement best describes the amount each will receive?

A partial withdrawal is considered:

Which of the following beneficiary designations prevents a policyholder from assigning the policy, taking a policy loan, or surrendering the policy without the beneficiary's consent?

The remaining proceeds of the insurance policy will be paid to:

The interest earned on dividends is:

Which of the following two documents always constitutes part of the entire contract?

All of the following can determine the death benefit settlement option, except:

As a general rule, most insurance companies will allow the insured to change to another type of insurance policy without a medical examination if the:

All of the following are life insurance policy prohibited provisions, except:

Generally, an insurer may defer the granting of a policy loan for up to:

An insured allows a permanent policy to lapse. Unless otherwise instructed, the insurance company:

Each of the following is a source of life insurance policy dividends, except:

The name of the beneficiary designation that will pay a deceased beneficiary's share to the heirs of that beneficiary who predeceases the insured is called:

If the premiums are not paid on a Traditional Whole Life policy that has been in force for decades with no loan outstanding, what happens?

John is the insured. His wife Mary is the primary beneficiary. Their three children are the contingent beneficiaries. John and Mary are killed in a common accident. The proceeds of John's policy would be paid to:

What provision establishes that if both the insured and the primary beneficiary die in the same accident, and it cannot be determined who died first, the insured will be presumed to have survived the beneficiary?

Z is the beneficiary of a life insurance policy. Rather than take a lump sum, Z wanted a lifetime payout. However, Z would feel bad if after he died, residual values were retained by the insurer rather than being paid out. Z should consider which of the following settlement options?

What allows the owner to name the beneficiary, choose a dividend option or settlement option, or borrow against the contract?

The factors that determine the amount of each payment under the fixed period settlement option are:

If an insured commits suicide within the time specified by the suicide clause, the insurance company may do all of the following, except:

Which of the following correctly describes the effect of the Common Disaster Clause?

The provision that limits the amount of time an insurer has to challenge a claim and void the contract upon proof of a material misstatement is called the ____________ clause.

Study Notes

Contract and Policy Components

Settlement Options

Ownership and Beneficiary Provisions

Suicide Clause

Payment Options

Beneficiary Designations and Claims

Policy Features and Provisions

Insurer’s Rights and Limitations

Death Benefits and Contingency

Tax Implications

Miscellaneous Provisions

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