What could be the potential result of taking out a cash value loan under a life insurance policy?
answer
Reduces the amount receivable upon surrender of the contract
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In what way is a life insurance policy affected by an accelerated benefit payment?
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Decreases the death benefit
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Which life insurance policy would be eligible to include an automatic premium loan provision?
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Whole life
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A life insurance policy that includes a return of premium rider will pay the beneficiary how much upon the insured's death?
answer
Total premiums paid plus the policy face amount
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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?
answer
Long-term care benefit rider
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A life insurance policy provision that has the ability to reduce the death benefit is called the
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accelerated (living) benefit
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Which of the following is true regarding a person receiving a waiver of premium benefit?
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The insured must be disabled for a period of time
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Which of these statements regarding the extended term insurance nonforfeiture option in a life policy is accurate?
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The premium to purchase the coverage comes from the policy's cash value
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How is the insured protected if a payor benefit rider is attached to the life insurance policy?
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Premium payments are waived in the event the premium payor dies or becomes disabled
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The automatic premium loan provision can be accurately described as a
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provision that provides a policy loan to pay any premiums by the end of the grace period
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What effect can a long-term care benefit rider have on a life insurance policy?
answer
Reduced death benefit
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What is payable to the policyowner if a whole life policy is surrendered prior to its maturity date?
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The cash value
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Which of the following is NOT subject to the promise to pay in an insuring clause?
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How the premium is calculated
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A life insurance policy's waiver of premium rider has the ability to
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relieve the insured of premium payments following an initial waiting period after the insured becomes totally disabled
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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?
answer
$25,000
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How long can an insurer legally defer paying the cash value of a surrendered life insurance policy?
answer
6 months
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Which of the following is NOT a condition that must be met for an accidental death benefit to be paid?
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Cause of death must be from a job-related injury
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Which of the following is NOT a dividend option for a life insurance policy?
answer
Receiving the entire policy cash value
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Which of these would NOT be a valid reason to add the waiver of premium rider to a life insurance policy?
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It allows a policy loan to cover premium payments if the policyowner becomes totally disabled
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Joe is a life insurance policyowner who has failed to pay interest on his policy loan. What will result from this nonpayment?
answer
Loan amount is increased to reflect the amount of interest due
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Which statement regarding the waiver of premium rider is accurate?
answer
Cash payment is not directly provided to the policyowner
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In the event of premium default, which life insurance provision will use the cash value to keep the policy in force?
answer
Automatic premium loan
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Which benefit supplement added to a life insurance policy insures an entire family?
answer
Family term rider
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Which of the these is NOT a true statement of the war exclusion?
answer
Civil insurrections apply
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A source of supplemental income for a life insurance policyowner can be derived from the
answer
cash value
question
Which life insurance clause prohibits an insurance company from questioning the validity of the contract after a stated period of time has passed?
answer
Incontestable clause
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Which life insurance policy option allows the policyowner to have coverage equal to the net death benefit of the lapsed policy?
answer
Extended term nonforfeiture option
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How may an insurance company classify an accidental death benefit on a life policy?
answer
As an optional policy rider
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What is the name of the rider that provides an additional purchase option in a life insurance policy?
answer
Guaranteed insurability rider
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What happens to the death benefit of a life insurance policy if the insured elects a partial payment from the accelerated (living) benefit provision?
answer
Reduced
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If an insured dies during the grace period without having paid the premium, how much will the insurer pay?
answer
Policy's face amount minus any premiums due
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After the extended term life nonforfeiture option is chosen, the available insurance will be
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level term for a stated period of time
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Which of these statements is NOT true regarding a cash value loan against a life insurance policy?
answer
Interest payments made by policyowner are deductible
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A life insurance guaranteed insurability rider gives the insured the right, without proving insurability, to
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periodically purchase additional insurance
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Which benefit is normally payable to a life insurance policyowner when the insured's life expectancy has been severely limited?
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Accelerated (living) benefit
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Scott has a life insurance policy in which the dividends are left with the insurance company. This particular policy may be paid up when the cash value plus accumulated dividends
answer
equal the net single premium for the same face amount at the insured's attained age
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What happens to a life insurance policy when the policy loan balance exceeds the cash value?
answer
Policy will no longer be in force
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A policyowner has a life insurance policy where she had listed her age on the application as 5 years younger than her actual age. If she dies and the insurer discovers the misstatement of age, how much will the insurance company pay?
answer
Less than the face amount
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A life insurance policyowner would like a dividend option that results in a limited current outlay of funds. Which dividend option would be chosen?
answer
Reduction of premium payment
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Which life insurance policy provision allows a policyowner to cancel the policy and receive a full refund within a limited time period after policy delivery?
answer
Free-look period
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Which statement regarding the life insurance premium for a children's rider is true?
answer
Premium remains the same no matter how many children
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A policyowner is permitted to take out a policy loan on a whole life policy at what point?
answer
When the policy has a cash value
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What is considered the collateral on a life insurance policy loan?
answer
The policy's cash value
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When a lapsed policy's premium has been paid current, it has the potential of being
answer
reinstated
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A life insurance policy that contains an accelerated (living) benefit rider will provide funds if the
answer
insured is expected to be confined to a nursing home for life
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What happens when a policyowner borrows against the cash value of his life insurance policy?
answer
The policy proceeds would be reduced by the outstanding loan balance
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Which of these is NOT a common life insurance nonforfeiture option?
answer
Life income annuity
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The absolute assignment of a life insurance policy results in
answer
all incidents of ownership transferred to the assignee
question
How is a collateral assignment used in a life insurance contract?
answer
Transfers specific ownership rights to a creditor
question
Which of the following is NOT guaranteed in a whole life policy?
answer
Dividend scale
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