Question 1

A tontine is:

Accepted Answer

A)  a form of endowment insurance 
B)  used frequently to provide retirement income 
C)  a life insurance contract paying a death claim on the second person to die 
D)  one reason for the divisible surplus provision 
A)  a form of endowment insurance 
B)  used frequently to provide retirement income 
C)  a life insurance contract paying a death claim on the second person to die 
D)  one reason for the divisible surplus provision

Question 2

Which of the following is true?

Accepted Answer

A)  The life insurance grace period gives the insured two months during which to correct any misinformation supplied in the application for coverage. 
B)  If the insured misstates his/her age on a life insurance application, the insurer has grounds for voiding the contract. 
C)  The purpose of the beneficiary clause in life insurance is to enable the policy owner to designate to whom the proceeds shall be paid when the insured dies. 
D)  The life insurance assignment clause requires that the policy owner get the insurer's consent before assigning policy ownership to someone else. 
A)  The life insurance grace period gives the insured two months during which to correct any misinformation supplied in the application for coverage. 
B)  If the insured misstates his/her age on a life insurance application, the insurer has grounds for voiding the contract. 
C)  The purpose of the beneficiary clause in life insurance is to enable the policy owner to designate to whom the proceeds shall be paid when the insured dies. 
D)  The life insurance assignment clause requires that the policy owner get the insurer's consent before assigning policy ownership to someone else.

Question 3

Explain briefly the operation of the guaranteed insurability rider, the waiver of premium rider, and the double indemnity rider.

Accepted Answer

The guaranteed insurability rider provid

Question 4

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 5

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 6

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 Mike's 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 7

A life insurer has a legal obligation to make a policyholder loan if requested by an insured.

Accepted Answer

A) True 
 B)False

Question 8

All lapsed life insurance policies may be reinstated.

Accepted Answer

A) True 
 B)False

Question 9

Life insurance policies do not contain deductible provisions.

Accepted Answer

A) True 
 B)False

Question 10

Jameson decides to withdraw (not borrow) his life insurance policy's cash value. What happens to the death protection?

Accepted Answer

A)  It matures. 
B)  It ends. 
C)  It is suspended at the discretion of the insurer. 
D)  It is paid-up. 
A)  It matures. 
B)  It ends. 
C)  It is suspended at the discretion of the insurer. 
D)  It is paid-up.

Question 11

Which of the following is not a life insurance nonforfeiture option?

Accepted Answer

A)  Cash 
B)  Reduced face paid up term insurance 
C)  Extended term insurance 
D)  Reduced face paid up whole life insurance 
A)  Cash 
B)  Reduced face paid up term insurance 
C)  Extended term insurance 
D)  Reduced face paid up whole life insurance

Question 12

McCartney lied on his life insurance application. He said he was 40, but he was really 60. McCartney dies during the seventh year his policy is in force. When the insurance company finds out about the misstatement of age, what will it do?

Accepted Answer

A)  Deny the claim, based on fraud 
B)  Pay the face value of McCartney's policy to his beneficiary 
C)  Pay some fraction of the face value of McCartney's policy to his beneficiary 
D)  Pay the face value of McCartney's policy to his beneficiary if the beneficiary submits documentation attesting to the fact that he/she knew nothing of the misstatement 
A)  Deny the claim, based on fraud 
B)  Pay the face value of McCartney's policy to his beneficiary 
C)  Pay some fraction of the face value of McCartney's policy to his beneficiary 
D)  Pay the face value of McCartney's policy to his beneficiary if the beneficiary submits documentation attesting to the fact that he/she knew nothing of the misstatement

Question 13

The owner of a life insurance policy has which of the following rights under the contract?

Accepted Answer

A)  Select the beneficiary 
B)  Discontinue the policy's coverage 
C)  Borrow the cash value 
D)  All of the above 
A)  Select the beneficiary 
B)  Discontinue the policy's coverage 
C)  Borrow the cash value 
D)  All of the above

Question 14

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

Accepted Answer

A) True 
 B)False

Question 15

Cheryl buys a life insurance policy with a two-year incontestable 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 16

The insured is the person whose death causes the insurer to pay the claim.

Accepted Answer

A) True 
 B)False

Question 17

List and describe briefly the various settlement options under life insurance contracts.

Accepted Answer

The following are standard settlement pr

Question 18

The age of the beneficiary is a factor used to calculate the amount paid from a life insurance policy under the ________ settlement option.

Accepted Answer

A)  life income 
B)  interest 
C)  fixed amount 
D)  fixed 
A)  life income 
B)  interest 
C)  fixed amount 
D)  fixed

Exam 16: Standard Life Insurance Contract Provisions and Options

A tontine is:

Which of the following is true?

Explain briefly the operation of the guaranteed insurability rider, the waiver of premium rider, and the double indemnity rider.

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

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

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 Mike's condition. In this case the insurer must:

A life insurer has a legal obligation to make a policyholder loan if requested by an insured.

All lapsed life insurance policies may be reinstated.

Life insurance policies do not contain deductible provisions.

Jameson decides to withdraw (not borrow) his life insurance policy's cash value. What happens to the death protection?

Which of the following is not a life insurance nonforfeiture option?

McCartney lied on his life insurance application. He said he was 40, but he was really 60. McCartney dies during the seventh year his policy is in force. When the insurance company finds out about the misstatement of age, what will it do?

The owner of a life insurance policy has which of the following rights under the contract?

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

Cheryl buys a life insurance policy with a two-year incontestable 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 insured is the person whose death causes the insurer to pay the claim.

List and describe briefly the various settlement options under life insurance contracts.

The age of the beneficiary is a factor used to calculate the amount paid from a life insurance policy under the ________ settlement option.

Introduction to Enterprise Risk Management and Insurance

Risk Identification

Risk Assessment and Pooling

Risk-Handling Techniques: Loss Control, Risk Transfer, and Loss Financing

Risk-Handling Techniques: Diversification and Hedging

Fundamentals of Insurance

Insurable Perils and Insuring Organizations

Insurance Functions

Insurance Markets: Economics and Issues

Insurance Regulation

Insurance Contracts

The Personal Auto Policy

Homeowners Insurance

Professional Financial Planning

Life Insurance Policies

Annuities

Health Insurance and Disability Income

Employee Benefits

Social Security

Unemployment and Workers Compensation Insurance

Commercial Property Insurance

Commercial Liability Insurance

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