3 – Life Insurance Policies – Provisions, Options and Riders (Exam 2)

Which of these provisions require proof of insurability after a policy has lapsed? -Insuring -Conversion -Reinstatement -Consideration

The Consideration clause in a life insurance policy indicates that a policyowner's consideration consists of a completed application and -the initial premium -agreeing to a physical examination -delivery of policy -disclosure of any medical conditions

What action will an insurer take if an interest payment on a policy loan is not made on time? -cancel the policy if not paid within the grace period -automatically add the amount of interest due to the loan balance -subtract from any dividends owed -disallow any further loans

When an insurer issues a policy that refuses to cover certain risks, this is referred to as a(n) -elimination -exclusion -limitation -exception

Which provision prevents an insurer from changing the terms of the contract with the policyowner by referring to documents not found within the policy itself? -Policy Exclusion -Incontestable -Entire Contract -Assignment

The incontestable clause allows an insurer to -disallow a change of ownership throughout the Contestable period -disallow a change of beneficiary during the Contestable period -contest a claim at anytime if the cause of death was accidental -contest a claim during the contestable period

Which of these is NOT considered to be a right given to a policyowner? -Surrendering the policy's cash value -Modify a provision in the insurance contract -Assignment of ownership -Change the beneficiary, if revocable

T took out a $50,000 life insurance policy with an Accidental Death and Dismemberment rider. Five years later, T commits suicide. How much will the insurer pay? -The total premiums paid minus any policy loans -Nothing -$50,000 -$100,000

B owns a Whole Life policy with a guaranteed insurability option that allows him to purchase, without evidence of insurability, stated amounts of -additional Term Life coverage at any time -additional Term Life coverage at specified intervals -additional Whole Life coverage at any time -additional Whole Life coverage at specified times

P purchases a $50,000 term life insurance policy in 2005. One of the questions on the application ask if P engages in scuba diving, to which P answers "No". The policy is then issued with no scuba exclusions. In 2010, P takes up scuba diving and dies in a scuba-related accident in 2011. What will the insurer pay to P's beneficiary? -Premiums paid plus interest -Nothing. Claim will be denied -$50,000 minus any outstanding policy loans -$100,000 because the cause of death was accidental

S buys a $10,000 Whole Life policy in 2003 and pays an annual premium of $100. S dies 5 years later in 2008 and the insurer pays the beneficiary $10,500. What kind of rider did S include on the policy? -Accelerated death benefit rider -Return of premium rider -Family income rider -Term rider

D was actively serving in the Marines when he was killed in an automobile accident while on leave. His $100,000 Whole life policy contains a War Exclusion clause. How much will D's beneficiary's receive? -Refund of premiums paid plus interest -Nothing, due to actively serving in the armed forces -Double the face amount because cause of death was accidental -The full face amount

In a Life insurance contract, an insurance company's promise to pay stated benefits is called the -Insuring clause -Consideration clause -Entire Contract -Owner's rights

N is covered by a Term Life policy and does not make the required premium payment which was due August 1. N dies September 15. What action will the insurer take? -Claim will be denied -Claim will be paid in full -Claim will be partially paid -Claim will be decided by an arbitrator

What does the insuring agreement in a Life insurance contract establish? -An insurer's basic promise -The insurance policy's grace period -An insurer's required reserve amount -The obligations of the beneficiary