XCEL Chapter 4 Quiz & Flashcards on Policy Dividends

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Questions and Answers

All of the following are considered to be nonforfeiture options available to a policyowner EXCEPT...

Cash surrender value

Reduction of premium (correct)

Reduced paid-up insurance

Extended term insurance

Which situation accurately describes a reduced paid-up nonforfeiture option?

Policy has a decreased face amount

A life insurance policyowner does NOT have the right to...

Revoke an absolute assignment

Which of these is considered to be a Living Benefit option in a life insurance policy?

Accelerated death benefit Signup and view all the answers

What is the name of the provision which states that a copy of the application must be attached to the policy when issued?

Entire contract Signup and view all the answers

What is an insurer required to do when faced with an error made under the Misstatement of Age provision?

Pay age-corrected benefits Signup and view all the answers

Loans obtained by a policyowner against the cash value of a life insurance policy...

Would not be treated as taxable income Signup and view all the answers

A whole life policy option where extended term insurance is selected is called a...

Nonforfeiture option Signup and view all the answers

Which of these is NOT a characteristic of the Accelerated Death Benefit option?

It can only be chosen at the time of purchase Signup and view all the answers

All of these are valid policy dividend options for a life insurance policyowner EXCEPT...

Accumulate without interest Signup and view all the answers

Kurt is an active duty serviceman who was recently killed in an accident while home on leave. Which military service exclusion clause would pay upon his death?

Results Signup and view all the answers

James is the insured on a life insurance policy where his age was misstated on the application. Which of the following is CORRECT regarding the death benefit amount?

The death benefit paid will be what the premium would have purchased at the correct age Signup and view all the answers

A provision that allows a policyowner to temporarily give up ownership rights to secure a loan is called a...

Collateral assignment Signup and view all the answers

Pat owns a 20-pay life policy with a paid-up dividend option. Which of the following statements is true?

The policy may be paid up early by using policy dividends Signup and view all the answers

An endorsement found in an insurance plan which modifies the provisions of the policy is called a...

Rider Signup and view all the answers

Ownership of a life insurance policy may be temporarily transferred with a...

Collateral assignment Signup and view all the answers

Which dividend option would an insurer invest the policyowner's money and add any interest earnings as the dividends accrue?

Accumulation at interest option Signup and view all the answers

All of the following riders can increase the death benefit amount EXCEPT...

Waiver of premium Signup and view all the answers

In what part of an insurance policy are policy benefits found?

Declarations Signup and view all the answers

A waiver of premium rider allows an insured to waive premium payments if the insured is...

Completely and permanently disabled Signup and view all the answers

Study Notes

Nonforfeiture Options

Nonforfeiture options are available for policyowners, which include various benefits except reduction of premium.
A reduced paid-up nonforfeiture option results in a policy with a decreased face amount.
Nonforfeiture options include whole life policies that provide extended term insurance.

Living Benefits

Accelerated death benefit is a living benefit option that allows policyholders to receive part of the death benefit before death.

Contract Provisions

The entire contract provision requires that a copy of the application be attached to the policy upon issuance.
In situations where there is a misstatement of age, insurers must pay age-corrected benefits.

Policy Loans and Tax Implications

Loans against the cash value of a life insurance policy are not considered taxable income for the policyowner.

Dividend Options

Valid policy dividend options include accumulating dividends, but not accumulating without interest.
The accumulation at interest option allows insurers to invest the policyowner's money and grow dividends through interest.

Military Service Exclusions

Payable exclusions upon the death of a serviceman like Kurt fall under "results" clauses pertaining to accidents.

Death Benefit Amounts

If an insured’s age is misstated, the death benefit paid will equate to what the premium would have purchased if correctly stated.

Assignment Provisions

Collateral assignment provisions allow temporary transfer of ownership rights to secure a loan.
Ownership of life insurance can be temporarily transferred via collateral assignment.

Riders and Endorsements

A rider modifies the policy provisions and may provide additional benefits, such as a waiver of premium.
Waiver of premium riders allows individuals to skip premium payments if they become completely and permanently disabled.

Insurance Policy Benefits

Policy benefits are detailed in the declarations part of an insurance policy.
Certain riders increase death benefits, while the waiver of premium does not contribute to this increase.

Summary of Specific Scenarios

Policyowners with a 20-pay life policy have the opportunity to use dividends to pay off the policy early.

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Description

Test your knowledge on nonforfeiture options and life insurance rights with these flashcards from XCEL Chapter 4 Part 2. Each card presents a concept or question related to policyowner rights and options in life insurance. Perfect for reinforcing your understanding of these important terms.

XCEL Chapter 4 Part 2 Flashcards

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