Exam 12: Life Insurance Contractual Provisions

Bruce lied about his health history when he purchased a life insurance policy.He died 3 years after the policy was issued.Which life insurance policy provision will require the life insurer to pay the beneficiary even though Bruce lied on the application?

Which of the following statements about accelerated death benefits riders is (are)true? I.Under a terminal illness rider,after a partial payment is made to the insured,there is a reduction in the face amount of insurance,cash value,and premiums. II.Benefits under a long-term care rider are for home health care only.

Lionel purchased a $200,000 ordinary life insurance policy when he was 25 years old and had significant life insurance needs.Now Lionel is 50.His mortgage is almost paid-off and his children have left home and are financially independent.Lionel no longer wants to pay premiums,but he would like to have some permanent life insurance in force.Which nonforfeiture option could Lionel employ to meet these objectives?

Beth purchased a participating life insurance policy 6 years ago.Her life insurance needs have increased,but she has developed a medical condition that makes it impossible for her to purchase more life insurance at affordable premiums.Which dividend option makes sense for Beth to use given her medical condition?

Life insurance policy proceeds can be paid to a trustee upon the death of the insured.All of the following statements about having the proceeds paid to a trustee are true EXCEPT

A dividend option that allows the policyowner to purchase 1-year term insurance is referred to as the

Which of the following statements about the grace period in a life insurance contract is (are)true? I.It is usually between 90 and 180 days in duration. II.If the insured dies during the grace period,the death benefit is reduced by 50 percent.

Al was named the beneficiary in his mother's life insurance policy.His mother died during the contestable period.The insurer denied payment,citing a material misrepresentation on the application.Al believes the insurer should pay the claim because the misrepresentation occurred on the application,and the application is not part of the formal agreement between the insurer and the policyholder.Which provision protects the insurer by making the application part of the formal agreement between the parties to the contract?

Which of the following statements about the guaranteed purchase option is true?

A contingent beneficiary in a life insurance policy has the right to

What major feature distinguishes a participating policy from a nonparticipating policy?

All of the following are nonforfeiture options found in cash value life insurance policies EXCEPT

Which of the following statements is (are)true concerning the automatic premium loan provision? I.Unlike other policy loans,interest is not charged on automatic premium loans. II.The basic purpose of an automatic premium loan is to prevent a life insurance policy from lapsing.

Which of the following statements about the guaranteed purchase option is true?

Which of the following statements about a typical accidental death benefit rider is (are)true? I.Death must occur within 14 days of the covered accident. II.The accidental death must occur prior to some specified age.

Which of the following statements about dividend options is (are)true? I.The interest on dividends left to accumulate with the insurer is not considered to be taxable income. II.Paid-up additions are additional units of whole life insurance.

Advantages of selecting the paid-up additions dividend option in a life insurance policy include which of the following? I.Evidence of insurability is not required to purchase additional insurance. II.The additions are purchased at net rates without loading for expenses.

All of the following are requirements that must be satisfied before premiums are waived under a waiver-of-premium provision EXCEPT

All of the following are reasons an insurer can contest a policy after the contestable period has ended EXCEPT

Tim purchased a 10-payment whole life insurance policy 15 years ago.Tim would like to donate this paid-up policy to a charity.Under which policy provision can Tim transfer all ownership rights in the policy to the charity?