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Questions and Answers
What does a level premium indicate?
What does a level premium indicate?
The premium is fixed for the entire duration of the contract.
What characterizes a noncontributory group term life plan?
What characterizes a noncontributory group term life plan?
The entire cost of the plan is paid for by the employer.
Which provision is NOT a requirement in a group life policy?
Which provision is NOT a requirement in a group life policy?
Accidental (AD&D) provision is not required in a group life policy.
What is accurate regarding an Individual Straight Life annuity?
What is accurate regarding an Individual Straight Life annuity?
What does the Consideration clause in a life insurance policy indicate?
What does the Consideration clause in a life insurance policy indicate?
What action will an insurer take if an interest payment on a policy loan is not made on time?
What action will an insurer take if an interest payment on a policy loan is not made on time?
What can a policyowner do if an application for a bank loan requires collateral?
What can a policyowner do if an application for a bank loan requires collateral?
What action will the insurer take if M dies without making the premium payment due on January 1?
What action will the insurer take if M dies without making the premium payment due on January 1?
What feature would limit the insurer's obligation if N was killed while flying as a student pilot?
What feature would limit the insurer's obligation if N was killed while flying as a student pilot?
Which life insurance rider allows the applicant to have excess coverage?
Which life insurance rider allows the applicant to have excess coverage?
Whose life is covered on a life insurance policy with a payor benefit clause?
Whose life is covered on a life insurance policy with a payor benefit clause?
What is the insurance company's promise to pay stated benefits in a life insurance contract called?
What is the insurance company's promise to pay stated benefits in a life insurance contract called?
What will the beneficiary receive if the insured dies during the Grace Period?
What will the beneficiary receive if the insured dies during the Grace Period?
What will happen if P's premiums are waived due to a disability?
What will happen if P's premiums are waived due to a disability?
What special need does a policyowner require with an Adjustable Life insurance policy?
What special need does a policyowner require with an Adjustable Life insurance policy?
What type of life insurance are credit policies issued as?
What type of life insurance are credit policies issued as?
How long does coverage normally remain on a limited-pay life policy?
How long does coverage normally remain on a limited-pay life policy?
What describes a Modified Endowment Contract (MEC)?
What describes a Modified Endowment Contract (MEC)?
Which is an element of a Variable Life policy?
Which is an element of a Variable Life policy?
What is the coverage limit on a group credit life policy?
What is the coverage limit on a group credit life policy?
What type of life insurance incorporates flexible premiums and an adjustable death benefit?
What type of life insurance incorporates flexible premiums and an adjustable death benefit?
What is correct regarding the premium payment schedule for whole life policies?
What is correct regarding the premium payment schedule for whole life policies?
What type of life policy has a death benefit that adjusts periodically?
What type of life policy has a death benefit that adjusts periodically?
What kind of life insurance policy pays a specified monthly income to a beneficiary for 30 years?
What kind of life insurance policy pays a specified monthly income to a beneficiary for 30 years?
What kind of life insurance product covers children under their parent's policy?
What kind of life insurance product covers children under their parent's policy?
What is true concerning a Variable Universal Life policy?
What is true concerning a Variable Universal Life policy?
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Study Notes
Premium Structures
- A level premium remains unchanged throughout the contract duration.
- In a noncontributory group term life plan, the employer covers the entire premium cost.
Group Life Policies
- An AD&D (Accidental Death & Dismemberment) provision is optional, not required, in group life insurance.
- Group credit life policies are limited to the total loan amount for coverage.
Annuities and Life Insurance Features
- Individual Straight Life annuities provide payments for the annuitant's lifetime.
- The insuring clause in a life insurance contract represents the company’s promise to fulfill stated benefits.
Policyowner Actions
- Unpaid interest on a policy loan is added to the loan balance automatically by insurers.
- Policyowners can assign policy ownership to a bank as collateral for loans.
Beneficiary Provisions
- If an insured dies during the grace period without paying premiums, beneficiaries receive the face amount minus outstanding premiums.
- In the case of a participating life policy, insured individuals who become disabled still qualify for declared dividends despite waived premiums.
Types of Life Insurance Policies
- Adjustable Life insurance offers flexible premium payments and an adjustable death benefit.
- Universal Life insurance combines flexible premiums with adjustable death benefits.
- Term riders allow for additional excess life insurance coverage.
- Decreasing term policies feature a periodically adjusting death benefit for a specified duration.
Special Provisions and Riders
- A Family Maintenance Policy provides monthly income for 30 years, followed by a lump sum payment.
- Term riders are specifically designed to cover children's insurance needs under a parent's policy.
- Variable Universal Life policies empower policyowners with control over investment placement and premium amounts.
Classification and Limitations
- Credit life insurance policies are typically categorized as term insurance.
- Modified Endowment Contracts (MEC) surpass the premium limits that exempt them from being categorized as life insurance.
- Coverage under a limited-pay life policy generally continues until the insured reaches the age of 100 years.
Key Life Insurance Concepts
- The consideration clause includes both a completed application and the initial premium payment.
- Policy conditions define the obligations of insurers, such as exclusions for certain hazards (e.g., risks associated with being a student pilot).
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