Question 1

Dallas took out a loan against her life insurance policy's cash value. She died before the loan could be repaid. The face value of the policy was $150,000. The insurer will pay Dallass beneficiary:

Accepted Answer

A) $150,000 
B) $150,000 minus the amount Dallas owed on the loan 
C) $0 
D) the total premiums Dallas paid in before she died

Question 2

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

Question 3

All lapsed life insurance policies may be reinstated.

Accepted Answer

A) True 
 B)False

Question 4

The double indemnity option makes good sense for most families since the cost is low,and the option doubles the face amount of insurance for most causes of death other than accident.

Accepted Answer

A) True 
 B)False

Question 5

An insured has a legal right to borrow an amount up to the face amount of insurance with a whole life policy.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following is false regarding the incontestable clause?

Accepted Answer

A) applies to misstatement of age 
B) does not restrict suits challenging accidental death benefits 
C) eliminates suits by the insurer if a more hazardous occupation is discovered by the insurer 3 years after the policy has been in force 
D) was voluntarily added to policies by some insurers

Question 7

Brak purchased a $25,000 life insurance policy from INSCO on January 1. After failing his introductory insurance class,he committed suicide on December 15 of the same year. At the time of his death,he had paid $1,500 in premiums,and his policy had a cash value of $600. How much will INSCO pay Brak's beneficiary,assuming that the policy contained a 2-year suicide clause?

Accepted Answer

A) $600 
B) $1,500 
C) $23,500 
D) $1,500 plus interest

Question 8

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.

Question 9

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

Question 10

The entire-contract provision makes the application for life insurance a part of the contract itself if attached.

Accepted Answer

A) True 
 B)False

Question 11

What is the purpose of the reinstatement provision? What are the requirements for reinstatement?

Accepted Answer

The answer of What is the purpose of the reinstatement...

Question 12

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

Accepted Answer

The answer of Explain briefly the operation of the guaranteed...

Question 13

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

Accepted Answer

A) True 
 B)False

Question 14

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

Accepted Answer

A) True 
 B)False

Question 15

Wayne owns a 20-year renewable term life insurance policy. He decides to let the policy lapse. What happens to his cash value in the policy?

Accepted Answer

A) The insurer retains it 
B) The insurer refunds 100% of it 
C) The insurer refunds 100% of it, less any loan balances due 
D) None of the above

Question 16

____________ cannot be a designated life insurance beneficiary.

Accepted Answer

A) The insured's estate 
B) A business corporation 
C) The insured 
D) none of the above

Question 17

One life insurance nonforfeiture option allows the insured to convert a whole life policy into term insurance.

Accepted Answer

A) True 
 B)False

Question 18

Only whole life insurance policies have a grace period.

Accepted Answer

A) True 
 B)False

Question 19

Which of the following is not an advantage of using dividends to purchase paid-up additions of life insurance?

Accepted Answer

A) there are no medical exams 
B) there are no acquisition fees and expenses are minimal 
C) paid up additions have their own cash value 
D) they produce taxable income

Question 20

The guaranteed insurability option allows the insured to:

Accepted Answer

A) purchase additional amounts of life insurance without proof of insurability 
B) purchase life insurance for his friends without proof of insurability 
C) retain coverage even if the insurer learns that the insured lied on the insurance application 
D) receive a discount for taking an extensive physical examination before coverage begins

Exam 14: Standard Life Insurance Contract Provisions And Options

Dallas took out a loan against her life insurance policy's cash value. She died before the loan could be repaid. The face value of the policy was $150,000. The insurer will pay Dallass beneficiary:

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

All lapsed life insurance policies may be reinstated.

The double indemnity option makes good sense for most families since the cost is low,and the option doubles the face amount of insurance for most causes of death other than accident.

An insured has a legal right to borrow an amount up to the face amount of insurance with a whole life policy.

Which of the following is false regarding the incontestable clause?

Which of the following is true?

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

The entire-contract provision makes the application for life insurance a part of the contract itself if attached.

What is the purpose of the reinstatement provision? What are the requirements for reinstatement?

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

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

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

Wayne owns a 20-year renewable term life insurance policy. He decides to let the policy lapse. What happens to his cash value in the policy?

____________ cannot be a designated life insurance beneficiary.

One life insurance nonforfeiture option allows the insured to convert a whole life policy into term insurance.

Only whole life insurance policies have a grace period.

Which of the following is not an advantage of using dividends to purchase paid-up additions of life insurance?

The guaranteed insurability option allows the insured to: