Exam 12: Life Insurance Contractual Provisions

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?

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)

Which of the following statements about the entire contract clause is true?

Which of the following statements about the ownership of a life insurance policy is (are) true? I.Under the ownership clause, the policyholder and beneficiary equally share all contractual rights in the policy while the insured is living. II.The policyholder can designate a new owner by filing an appropriate form with the insurance company.

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.

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 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 the assignment of a life insurance policy is true?

The transfer of all ownership rights in a life insurance policy can be accomplished through a(n)

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

Which of the following statements about beneficiary designations is (are) true? I.The primary beneficiary is entitled to the death proceeds of a life insurance policy only if the contingent beneficiary dies before the insured. II.If a revocable beneficiary designation is used, the insured must obtain the beneficiary's permission of exercise most policy rights.

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 income settlement options is (are) true? I.Under a joint-and-survivor life 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.

The cost-of-living rider typically bases increases in the policy face value on changes in the

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?

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 is (are) true concerning the automatic premium loan provision? I.Unlike other policy loans, interest is not charged on automatic premium loans. II. The basic purpose of an automatic premium loan is to prevent a life insurance policy from lapsing.

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?

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