Which statement is TRUE in regards to a policy loan?
answer
Past-due interest on a policy loan is added to the total debt
question
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?
answer
The full face amount
question
An insured's inability to perform two or more activities of daily living may trigger which type of policy rider?
answer
Long term care
A long term care rider is triggered by the insured's inability to perform two or more activities of daily living.
question
All of these statements concerning Settlement Options are true EXCEPT
answer
Only the beneficiary may select
Settlement options may be selected by the policy-owner
question
How do life insurance companies handle cases where the insured commits suicide within the contract's stated Contestable period?
answer
Claims are denied under the Suicide clause of the policy
question
What action will an insurer take if an interest payment on a policy loan is not made on time?
answer
automatically add the amount of interest due to the loan balance
Unpaid interest from a policy loan is added to the loan balance if not paid by the due date.
question
Additional coverage can be added to a Whole Life policy by adding a(n)
answer
decreasing term rider
question
What provision in a life insurance policy states that the application is considered part of the contract?
answer
Entire Contract provision
The Entire Contract provision, found at the beginning of the policy, states that the policy document, the application (which is attached to the policy), and any attached riders constitute the entire contract.
question
What is the Suicide provision designed to do?
answer
safeguard the insurer from an applicant who is contemplating suicide
question
D is the policyowner and insured for a $50,000 life insurance policy. The beneficiary is D's wife. D and his wife divorce and D remarries, transferring ownership of his policy to his new wife. If D dies without making any further changes, to whom will the policy proceeds be paid to?
answer
Ex-wife
D's ex wife is still the beneficiary of this policy, even though policy ownership has changed to his current spouse
question
Which of these types of life insurance allows the policyowner to have level premiums and to also choose from a selection of investment options?
answer
Variable Life
A life insurance policy that has a level premium but allows the policyowner to choose from a selection of investment options is known as Variable Life.
question
Which life insurance rider typically appears on a Juvenile life insurance policy?
answer
Payor Benefit rider
A payor benefit rider provides for waiver of premium if the adult-payor of the policy dies or becomes totally disabled.
question
All of these statements about the Waiver of Premium provision are correct EXCEPT
1. A waiting period must pass before becoming eligible for benefits
2.Waiver of Premium is available on both permanent and term insurance policies
3.Insured must be eligible for Social Security disability for claim to be accepted
4.Insured must be totally disabled to qualify
answer
Insured must be eligible for Social Security disability for claim to be accepted
question
The automatic premium loan provision is designed to
answer
avoid a policy lapse
question
In a life insurance policy, which feature states that the policy will not cover certain risks?
answer
Exclusion
The feature of a life insurance policy stating that the policy will not cover certain risks is called an exclusion.
question
When does a Guaranteed Insurability Rider allow the insured to buy additional coverage?
answer
at future dates specified in the contract with no evidence of insurability required
question
S buys a $50,000 whole life policy with a $50,000 Accidental Death and Dismemberment rider. S dies 1 year later of natural causes. How much will the insurer pay the beneficiary?
answer
$50,000
question
A young, married teacher has two children and owns a Whole Life policy. If the teacher wants an increasing Death Benefit to protect against inflation, the teacher should select which of the following Dividend Options?
answer
Paid-Up Additional Insurance
question
Which of these are NOT an example of a Nonforfeiture option?
1. Extended Term
2. Reduced Paid-up
3. Cash Surrender
4. Life Income
answer
Life Income
question
How are surrender charges deducted in a life policy with a rear-end loaded provision?
answer
Deducted when the policy is discontinued
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