NWM Chapter 4 (Pt. 2) Quiz & Flashcards

Questions and Answers

What could be the potential result of taking out a cash value loan under a life insurance policy?

Reduces the amount receivable upon surrender of the contract

In what way is a life insurance policy affected by an accelerated benefit payment?

Decreases the death benefit

Which life insurance policy would be eligible to include an automatic premium loan provision?

Whole life

A life insurance policy that includes a return of premium rider will pay the beneficiary how much upon the insured's death?

Total premiums paid plus the policy face amount Signup and view all the answers

Tim is confined to a nursing home but doesn't have a terminal illness. Which life insurance rider is designed to help pay for this type of expense?

Long-term care benefit rider Signup and view all the answers

A life insurance policy provision that has the ability to reduce the death benefit is called the?

accelerated (living) benefit Signup and view all the answers

Which of the following is true regarding a person receiving a waiver of premium benefit?

The insured must be disabled for a period of time Signup and view all the answers

Which of these statements regarding the extended term insurance nonforfeiture option in a life policy is accurate?

The premium to purchase the coverage comes from the policy's cash value Signup and view all the answers

How is the insured protected if a payor benefit rider is attached to the life insurance policy?

Premium payments are waived in the event the premium payor dies or becomes disabled Signup and view all the answers

The automatic premium loan provision can be accurately described as a?

provision that provides a policy loan to pay any premiums by the end of the grace period Signup and view all the answers

What effect can a long-term care benefit rider have on a life insurance policy?

Reduced death benefit Signup and view all the answers

What is payable to the policyowner if a whole life policy is surrendered prior to its maturity date?

The cash value Signup and view all the answers

Which of the following is NOT subject to the promise to pay in an insuring clause?

How the premium is calculated Signup and view all the answers

A life insurance policy's waiver of premium rider has the ability to?

relieve the insured of premium payments following an initial waiting period after the insured becomes totally disabled Signup and view all the answers

An insured has a $25,000 whole life insurance policy with $6,000 cash value available. Under the extended term nonforfeiture option, what is the amount of insurance available to the insured?

$25,000 Signup and view all the answers

How long can an insurer legally defer paying the cash value of a surrendered life insurance policy?

6 months Signup and view all the answers

Which of the following is NOT a condition that must be met for an accidental death benefit to be paid?

Cause of death must be from a job-related injury Signup and view all the answers

Which of the following is NOT a dividend option for a life insurance policy?

Receiving the entire policy cash value Signup and view all the answers

Which of these would NOT be a valid reason to add the waiver of premium rider to a life insurance policy?

It allows a policy loan to cover premium payments if the policyowner becomes totally disabled Signup and view all the answers

Joe is a life insurance policyowner who has failed to pay interest on his policy loan. What will result from this nonpayment?

Loan amount is increased to reflect the amount of interest due Signup and view all the answers

Which statement regarding the waiver of premium rider is accurate?

Cash payment is not directly provided to the policyowner Signup and view all the answers

In the event of premium default, which life insurance provision will use the cash value to keep the policy in force?

Automatic premium loan Signup and view all the answers

Which benefit supplement added to a life insurance policy insures an entire family?

Family term rider Signup and view all the answers

Which of the following is NOT a true statement of the war exclusion?

Civil insurrections apply Signup and view all the answers

A source of supplemental income for a life insurance policyowner can be derived from the?

cash value Signup and view all the answers

Which life insurance clause prohibits an insurance company from questioning the validity of the contract after a stated period of time has passed?

Incontestable clause Signup and view all the answers

Study Notes

Cash Value Loans and Death Benefits

Taking out a cash value loan under a life insurance policy reduces the amount receivable upon surrender of the contract.
An accelerated benefit payment decreases the death benefit of the policy.

Life Insurance Provisions

Whole life policies can include an automatic premium loan provision.
A life insurance policy including a return of premium rider pays the beneficiary total premiums paid plus the policy face amount upon the insured's death.
The accelerated (living) benefit provision can reduce the death benefit.

Riders and Benefits

A long-term care benefit rider assists in paying expenses for those confined to a nursing home, even without a terminal illness.
A waiver of premium benefit requires the insured to be disabled for a certain period of time to be effective.
Premium payments are waived with a payor benefit rider if the premium payor dies or becomes disabled.

Nonforfeiture Options and Cash Values

Extended term insurance as a nonforfeiture option uses the policy's cash value to purchase coverage.
If a whole life policy is surrendered early, the policyowner receives the cash value.
An insurer can defer payment of the cash value from a surrendered life insurance policy for up to 6 months.

Exclusions and Conditions

Receipt of an accidental death benefit is not contingent upon the cause of death being job-related.
A dividend option does not allow for receiving the entire policy cash value.

Policy Loan and Premiums

Failure to pay interest on a policy loan results in an increase of the loan amount to reflect due interest.
The waiver of premium rider does not provide a direct cash payment to the policyowner.

Maintaining Policy Coverage

The automatic premium loan provision can use cash value to keep the policy in force in cases of premium default.
A family term rider extends insurance coverage to an entire family.

Other Provisions and Clauses

The incontestable clause prevents an insurance company from disputing the validity of the contract after a specified time period.
The war exclusion does not apply to civil insurrections.

Supplemental Income

Supplemental income for a life insurance policyowner can be sourced from the cash value of the policy.

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Description

Test your knowledge on key concepts from NWM Chapter 4, Part 2. This quiz includes important terms and their definitions related to life insurance policies, including cash value loans and accelerated benefit payments. Perfect for reviewing essential information before exams.

NWM Chapter 4 (Pt. 2) Review