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Exam 12: Life Insurance Contractual Provisions

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Question 21

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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.

A) I only
B) II only
C) both I and II
D) neither I nor II

E) B) and C)
F) A) and B)

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Question 22

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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.

A) I only
B) II only
C) both I and II
D) neither I nor II

E) A) and D)
F) A) and C)

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Question 23

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A life insurance policyholder may no longer need life insurance.Such a policyholder may sell the policy to a third party for more than its cash value.The purchaser becomes the new beneficiary and is responsible for subsequent premium payments.Such a financial transaction is called a(n)

Which of the following is a standard nonforfeiture option?

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?

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.

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

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

Which of the following is a common dividend option found in a participating life insurance policy?

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

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 statements about a typical accidental death benefit rider is (are) true? I.Accidental injury must be the cause of death for the increased benefit to be paid. II.The accidental death must occur prior to some specified age for the increased benefit to be paid.

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.

Which of the following statements about the waiver-of-premium provision in life insurance is true?

Which of the following statements about the assignment of a life insurance policy is (are) true? I.Under a collateral assignment,the policyowner assigns a life insurance policy to secure a loan. II.Under an absolute assignment,only limited ownership rights in a policy are transferred.

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?

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

An insurer denied payment of the life insurance proceeds to the beneficiary.The insurer claimed that during the application process,the insured hinted that she might be concealing something material.The life insurance agent made a note about this possibility and filed it with other related documents sixteen months ago when the policy was written.Which life insurance contractual provision protects the beneficiary by not permitting the insurer to introduce his outside information to deny the claim?

Reasons for NOT purchasing an accidental death benefit rider include which of the following? I.Most people die as a result of a disease rather than from an accident. II.The economic value of a human life is not increased if death occurs because of an accident.