Life Ins. Policy Provisions, Options & Riders

In which of the following situations does the incontestable clause apply?
A. Impersonation of the applicant by another
B. No insurable interest
C. Intent to murder
D. Concealment of smoking

An error in age is discovered after the death of an insured but before any policy death proceeds are distributed. The insured was older than previously assumed. How would an insurance company handle such a situation?
A. No adjustment would be made because the contestable period had passed.
B. The amount of death proceeds would be reduced to reflect the statistically diminished mortality risk.
C. The amount of death proceeds would be reduced to reflect whatever benefit the premium paid would have purchased at the correct age.
D. The beneficiary would be required to pay all underpaid back premiums before the death benefit is received.

Which of the following allows 30 days during which premiums may be paid to keep policies in force?
A. Grace period
B. Reinstatement clause
C. Incontestable clause
D. Waiting period

Which of the following statements regarding the assignment of a life insurance policy is not correct?
A. Absolute assignment involves a complete transfer, giving the assignee full control over the policy.
B. Under a collateral assignment, a creditor is entitled to be reimbursed out of the policy's proceeds only for the amount of the outstanding credit balance.
C. Under a collateral assignment, policy proceeds in excess of the collateral amount pass to the insured's beneficiary.
D. All beneficiaries must expressly approve any assignments of life insurance policies

Which of the following is (are) a common life insurance policy exclusion?
A. Death from was
B. Death by accidental means
C. Death by commercial aviation
D,. All of the above

All of the following are standard life insurance policy nonforfeiture options except
A. cash surrender option
B. 1-year term insurance option
C., extended term insurance option
D. reduced paid-up (permanent) insurance option

Which of the following statements best describes life insurance policy dividends?
A. Policy dividends represent earnings to shareowners who hold stock in insurance companies
B. Policy dividends affect the costs of virtually all insurance policies issued today.
C. Policy dividends are an intentional return of a portion of the premiums paid
D. Policy dividends provide policyowners with a level, known annual cash inflow,.

The most common guaranteed insurability riders allow additional life insurance to be purchased on the insured within a range of ages, The common age range in which guaranteed insurability is available is from
A. 16 to 65
B. 21 to 59 1/2
C. 25 to 40
D. 30 to 70 1/2

Which life insurance provision allows the policyholder to inspect and, if dissatisfied, to return the policy for a full refund?
A. Waiver of premium
B. Facility of payments
C. Probationary period
D. Free look

Which of the following statements regarding a cost of living (COL) rider on a life insurance policy is correct?
A. A cost of living rider provides for a level premium even if the cost of living increases.
B. An inflation index, usually the consumer Price Index, determines the amount of inflation adjustment that is made to the policy up to a maximum percentage increase,
C. To acquire additional amounts of life insurance under a COL rider, evidence of insurability must be provided.
D. Declines in the CPI cause corresponding declines in the amount of insurance coverage.

"If an insurance company determines that the insured is totally disabled, the policyowner is relieved of paying the policy premiums as long as the disability continues." This statement describes
A. the premium suspension clause
B. the waiting period exemption
C. the disability income rider
D. the waiver of premium rider

To what period would a 14-day free-look provision apply in Florida?
A. The first 14 days after the application has been signed by the applicant
B. The first 14 days after the application has been received by the insurer
C. The first 14 days after the policy has been issued by the insurer
D. The first 14 days after the issued policy has been received by the insured

All of the following statements regarding assignment of a life insurance policy are correct except
A. to secure a loan, the policy can be transferred temporarily to the lender as security for the loan
B, the policyowner must obtain approval from the insurance company before a policy can be assigned
C. the life insurance company assumes no responsibility for the validity of an assignment
D. the life insurance company must be notified in writing by the policyowner of any assignment

Which provision of a life insurance policy states that the application is part of the contract?
A. Consideration clause
B. Insuring clause
C. Entire contract clause
D. Incontestable clause

Ron, the insured under a $100,000 life insurance policy, dies during the grace period. What happens, considering that the premium on the policy has not been paid?
A. The premium is canceled because the insured died during the grace period.
B. The amount of the premium is deducted from the policy proceeds paid to the beneficiary
C. The premium due, plus a 10% penalty, is charged against the policy.
D. The beneficiary must pay the premium after the death claim is paid.