Exam 12: Life Insurance 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?

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.

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 true regarding an automatic premium loan provision?

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

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?

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

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?

Marcus is concerned that inflation will erode the purchasing power of the face value of his life insurance policy. His agent suggested that Marcus add a provision that allows him to purchase one-year term insurance equal to the percentage change in the consumer price index without having to demonstrate insurability. This provision is called a(n)

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

Which of the following statements is (are) true concerning settlement options? I.A straight life annuity provides the lowest amount of periodic income of all the life income options. II.Fixed-period and fixed-amount are life income options.

Sources of life insurance dividends include which of the following? I.Excess interest earned on the assets necessary to maintain legal reserves II.Favorable mortality experience

Which of the following is a standard nonforfeiture option?

All of the following statements about the requirements to reinstate a lapsed life insurance policy are true EXCEPT

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

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.

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?

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