Question 1

The entire contract clause in life insurance is designed to:

Accepted Answer

A) make sure the entire contract (written and oral)influences the interpretation of the contract 
B) bar any incorporation by reference of any documents not attached to the contract 
C) require that the policy application be forwarded directly to the beneficiary 
D) require that any policy illustrations provided by the agent become a part of the contract 
A) make sure the entire contract (written and oral)influences the interpretation of the contract 
B) bar any incorporation by reference of any documents not attached to the contract 
C) require that the policy application be forwarded directly to the beneficiary 
D) require that any policy illustrations provided by the agent become a part of the contract

Question 2

The beneficiary of a life insurance policy has the right to assign the policy as security for a loan.

Accepted Answer

A) True 
 B)False

Question 3

Choose the false statement:

Accepted Answer

A) The insured need never repay a policy loan, nor is he required to pay interest on the loan 
B) The insured usually has the right to borrow 80% of the face value of an ordinary life insurance policy 
C) Unpaid policy loans are deducted from the beneficiary's proceeds if the insured dies 
D) Life insurance companies cannot refuse to make policyholder loans on policies that have loan values 
A) The insured need never repay a policy loan, nor is he required to pay interest on the loan 
B) The insured usually has the right to borrow 80% of the face value of an ordinary life insurance policy 
C) Unpaid policy loans are deducted from the beneficiary's proceeds if the insured dies 
D) Life insurance companies cannot refuse to make policyholder loans on policies that have loan values

Question 4

Mike is dying of AIDS and knows it,but does not tell his agent when applying for life insurance.The contract is issued and Mike dies three years later,at which time the insurer learns of Mikes condition. In this case the insurer must:

Accepted Answer

A) pay the face of the policy to the beneficiary 
B) return all premiums plus interest 
C) return all premiums without interest 
D) pay the beneficiary, but the insurer can then subrogate against the insured's estate 
A) pay the face of the policy to the beneficiary 
B) return all premiums plus interest 
C) return all premiums without interest 
D) pay the beneficiary, but the insurer can then subrogate against the insured's estate

Question 5

George forgot to pay his monthly life insurance premium that was due on March 1. The policy had a face value of $100,000. On March 21,George died. How much will the insurer pay George's beneficiary for this death claim,assuming the policy contained a standard grace period clause?

Accepted Answer

A) Whatever cash value has accumulated in the policy 
B) $100,000 
C) $0 
D) An amount equal to the face value of the policy, MINUS the overdue premiums and any interest or late penalties George owed them 
A) Whatever cash value has accumulated in the policy 
B) $100,000 
C) $0 
D) An amount equal to the face value of the policy, MINUS the overdue premiums and any interest or late penalties George owed them

Question 6

The automatic premium loan provision in life insurance:

Accepted Answer

A) pays the face amount of a life insurance policy to a terminally ill insured 
B)  pays premiums due out of the policy's cash value if the policy owner forgets to pay 
C) provides spendable cash to a terminally ill insured out of the cash value 
D) provides disability income payments as a loan from the cash value 
A) pays the face amount of a life insurance policy to a terminally ill insured 
B)  pays premiums due out of the policy's cash value if the policy owner forgets to pay 
C) provides spendable cash to a terminally ill insured out of the cash value 
D) provides disability income payments as a loan from the cash value

Question 7

Explain how dividends may be used when distributed to the policy owner in a participating contract.

Accepted Answer

The following is a list of how dividends

Question 8

Nonparticipating life insurance will generally have lower initial premiums than participating life insurance.

Accepted Answer

A) True 
 B)False

Question 9

The insured must demonstrate good health,among other things,in order to reinstate a lapsed policy.

Accepted Answer

A) True 
 B)False

Question 10

The incontestable clause states that the insurer:

Accepted Answer

A) may not contest the policy after it has been in force for five years 
B) cannot void or contest the policy after it is issued 
C) may contest the policy at any time 
D) may not contest the policy after it has been in force one or two years 
A) may not contest the policy after it has been in force for five years 
B) cannot void or contest the policy after it is issued 
C) may contest the policy at any time 
D) may not contest the policy after it has been in force one or two years

Question 11

Cheryl buys a life insurance policy with a 2-year incontestible clause,and dies three years later. When she dies,her insurer discovers that she lied on application for coverage about her diabetes.What will happen?

Accepted Answer

A) The insurer will pay the claim 
B) The insurer will void the policy and not pay the claim because Cheryl made a material misrepresentation on her application 
C) The insurer will void the policy and not pay the claim based on the principle of indemnity 
D) Both b and c above 
A) The insurer will pay the claim 
B) The insurer will void the policy and not pay the claim because Cheryl made a material misrepresentation on her application 
C) The insurer will void the policy and not pay the claim based on the principle of indemnity 
D) Both b and c above

Question 12

The contract feature that waives life insurance premiums if the insured becomes permanently disabled is the:

Accepted Answer

A) disability assignment rider 
B) premium waiver clause 
C) disability income option rider 
D) waiver of premium rider 
A) disability assignment rider 
B) premium waiver clause 
C) disability income option rider 
D) waiver of premium rider

Question 13

What is/are the advantage(s)to purchasing an annuity from your life insurer by using the cash value in your whole life policy,rather than cashing in the policy and using the withdrawn cash values to purchase an annuity from another company?

Accepted Answer

A) no new acquisition costs are charged, and, possibly better annuity assumptions 
B) no new acquisition costs are charged, and, annuity prices are guaranteed to be low 
C) no new acquisition costs is the only advantage 
D) cheaper annuity pricing is the only advantage 
A) no new acquisition costs are charged, and, possibly better annuity assumptions 
B) no new acquisition costs are charged, and, annuity prices are guaranteed to be low 
C) no new acquisition costs is the only advantage 
D) cheaper annuity pricing is the only advantage

Question 14

The incontestability clause in life insurance primarily serves to protect the:

Accepted Answer

A) beneficiary 
B) insured 
C) insurer 
D) annuitant 
A) beneficiary 
B) insured 
C) insurer 
D) annuitant

Question 15

The typical grace period found in a life insurance policy is 60 days.

Accepted Answer

A) True 
 B)False

Question 16

If Lindsey lets her life insurance policy lapse,and then decides to later reinstate it,what happens with respect to the two-year suicide clause that was in the original policy?

Accepted Answer

A) It restarts with the date of reinstatement, and runs for another two years 
B) It restarts, but only runs for one year 
C) Nothing 
D) It restarts, but only runs the length of time that passed between the lapse and the reinstatement 
A) It restarts with the date of reinstatement, and runs for another two years 
B) It restarts, but only runs for one year 
C) Nothing 
D) It restarts, but only runs the length of time that passed between the lapse and the reinstatement

Question 17

Which modern insurance policy contract provision resulted from an early insurance law that required insurers to buy term insurance for the insured if the owner allowed the policy to lapse?

Accepted Answer

A) nonforfeiture provision 
B) preliminary term reserve system 
C) settlement option provision 
D) incontestable clause 
A) nonforfeiture provision 
B) preliminary term reserve system 
C) settlement option provision 
D) incontestable clause

Question 18

Explain what happens with regard to the insured misstating his/her age? Does the incontestable clause modify this result? Explain.

Accepted Answer

When the insured misstates his or her ag

Question 19

Life insurance policies do not contain deductible provisions.

Accepted Answer

A) True 
 B)False

Question 20

The incontestable clause means that the insurer may uncover an unquestionable fraud,and be unable to do anything about it if the incontestable period has expired.

Accepted Answer

A) True 
 B)False

Exam 14: Standard Life Insurance Contract Provisions And Options

The entire contract clause in life insurance is designed to:

The beneficiary of a life insurance policy has the right to assign the policy as security for a loan.

Choose the false statement:

Mike is dying of AIDS and knows it,but does not tell his agent when applying for life insurance.The contract is issued and Mike dies three years later,at which time the insurer learns of Mikes condition. In this case the insurer must:

George forgot to pay his monthly life insurance premium that was due on March 1. The policy had a face value of $100,000. On March 21,George died. How much will the insurer pay George's beneficiary for this death claim,assuming the policy contained a standard grace period clause?

The automatic premium loan provision in life insurance:

Explain how dividends may be used when distributed to the policy owner in a participating contract.

Nonparticipating life insurance will generally have lower initial premiums than participating life insurance.

The insured must demonstrate good health,among other things,in order to reinstate a lapsed policy.

The incontestable clause states that the insurer:

Cheryl buys a life insurance policy with a 2-year incontestible clause,and dies three years later. When she dies,her insurer discovers that she lied on application for coverage about her diabetes.What will happen?

The contract feature that waives life insurance premiums if the insured becomes permanently disabled is the:

What is/are the advantage(s)to purchasing an annuity from your life insurer by using the cash value in your whole life policy,rather than cashing in the policy and using the withdrawn cash values to purchase an annuity from another company?

The incontestability clause in life insurance primarily serves to protect the:

The typical grace period found in a life insurance policy is 60 days.

If Lindsey lets her life insurance policy lapse,and then decides to later reinstate it,what happens with respect to the two-year suicide clause that was in the original policy?

Which modern insurance policy contract provision resulted from an early insurance law that required insurers to buy term insurance for the insured if the owner allowed the policy to lapse?

Explain what happens with regard to the insured misstating his/her age? Does the incontestable clause modify this result? Explain.

Life insurance policies do not contain deductible provisions.

The incontestable clause means that the insurer may uncover an unquestionable fraud,and be unable to do anything about it if the incontestable period has expired.

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