Exam 12: Life Insurance and Contractual Provisions

A life insurance policyholder may no longer need life insurance.Such a policyholder may sell the policy to a third party for more than its cash value.The purchaser becomes the new beneficiary and is responsible for subsequent premium payments.Such a financial transaction is called a(n)

Which of the following dividend options,sometimes called the "fifth dividend option," is not offered by all insurers that sell participating life insurance coverage?

Becky is considering the purchase of a whole life policy on her own life.She is concerned that if she becomes disabled,paying premiums will become a burden.Which provision can Becky attach to her life insurance policy to address this concern?

Which of the following statements about the assignment of a life insurance policy is (are)true? I.Under a collateral assignment,the policyowner assigns a life insurance policy to secure a loan. II.Under an absolute assignment,only limited ownership rights in a policy are transferred.

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

Bert purchased a life insurance policy 4 years ago.He inadvertently stated that he was 1 year younger than his actual age.If Bert dies today,how much will the insurance company pay?

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?

A large life insurance policy acquired by a group of investors with the specific intention of selling the policy in the secondary life insurance market for a substantial profit is called a(n)

Reasons for NOT purchasing an accidental death benefit rider include which of the following? I.Most people die as a result of a disease rather than from an accident. II.The economic value of a human life is not increased if death occurs because of an accident.

Which statement about the incontestable clause is true? I.It protects the beneficiary if the insurer tries to deny a claim years after the policy is issued. II.If protects the insurer from having to pay a claim during the first two years if the insured made a material misrepresentation or concealed material information in the application.

Which of the following statements is (are)true concerning stranger-owned life insurance (STOLI)? I.Life insurers welcome the sale of life insurance contracts used in STOLI arrangements. II.At least one of the investors who purchases the policy must have an insurable interest in the insured.

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

All of the following statements about the interest settlement option are true EXCEPT

Amy purchased a life insurance policy with the intent of committing suicide to pay all the debts that were burdening her family.If she commits suicide 9 months after the policy is purchased,and the insurer is able to prove that her death was a suicide,how much will be paid by the insurance company?

Which of the following statements about life income settlement options is (are)true? I.Under a joint-and-survivor income option,payments cease at the death of the first annuitant. II.Under a life income with guaranteed period,a contingent beneficiary is guaranteed a minimum number of payments regardless of when the primary beneficiary dies.

Which of the following statements about accelerated death benefits riders is (are)true? I.The benefit paid is usually less than the full face amount. II.Several different medical conditions may trigger the payment of benefits.

If a life insurance policy lapses for nonpayment of premiums,and the policyholder has not elected another option,which nonforfeiture option usually goes into effect in most policies?

Which of the following statements about life insurance policy loans is (are)true? I.Interest is not required on a life insurance policy loan,as the policyholder is borrowing his or her own money. II.If there is an outstanding loan when the insured dies,payment to the beneficiary is reduced by the amount of the loan.

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 a loading for expenses.

Janet is the beneficiary of her uncle's $200,000 life insurance policy.When her uncle died,Janet selected a settlement option that pays monthly benefits for as long as she lives.If Janet dies before receiving $200,000,payments will continue to a contingent beneficiary until a total of $200,000 has been paid.What settlement option did Janet select?