Exam 12: Life Insurance and Contractual Provisions

Malcolm would like to purchase life insurance.He is concerned that he might need additional life insurance in the future and that he might be uninsurable at that time.What provision can Malcolm add to his life insurance policy that will permit him to purchase additional life insurance at specified times in the future without providing evidence of insurability?

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?

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

Which of the following statements regarding the accidental death benefit rider (also known as double indemnity)is true?

Which of the following statements about a typical accidental death benefit rider is (are)true? I.Accidental injury must be the cause of death for the increased benefit to be paid. II.The accidental death must occur prior to some specified age for the increased benefit to be paid.

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

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

Which of the following would be a valid reason for an insurer to contest a policy after the contestable period has ended?

Which of the following statements about the waiver-of-premium provision in life insurance is true?

A life insurance contractual provision protects the beneficiary by not permitting the insurer to introduce outside information to deny payment of the claim.Such outside information might be notes that the agent took while the insured completed the application.This contractual provision is the

Which life insurance policy provision specifies that it is the policyholder,and not the insured or beneficiary,who possesses all contractual rights while the policy is in force?

Which of the following statements about life insurance policy loans is true?

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.

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 change of plan provision in a life insurance contract is (are)true? I.A change to a lower premium policy results in a refund of the difference in the cash values of the two policies. II.A change to a higher premium policy requires evidence of insurability.

Bruce,age 62,was approached by a representative of a group of investors.The representative asked Bruce to purchase a large life insurance policy which the investor group would purchase from Bruce.Bruce doesn't need life insurance.The investor representative told Bruce to tell the agent he needed the policy for estate liquidity.Bruce purchased the policy,and then sold it to the investor group.The arrangement described in this scenario is called a(n)

Which of the following is a standard nonforfeiture option?

Which of the following statements is (are)true regarding exclusions in life insurance contracts? I.Life insurance policies are remarkably restrictive,including numerous exclusions. II.A life insurer may exclude death attributable to certain activities or hobbies disclosed on the application.

Jane purchased a life insurance policy on her own life and named her daughter,Cheryl,as beneficiary.Cheryl has a history of not managing money well.Jane wants the death benefit paid to Cheryl in monthly installments over 20 years.Which settlement option should Jane pre-select for Cheryl?

Easy Pay Life Insurance Company allows a term insurance rider to be added to its whole life policies.The result is a policy that offers an increased death benefit with an affordable premium.The general name for such a policy is a(n)