life policy provisions

  1. 1: Sam has a life insurance policy
    from a participating company and receives quarterly dividends. Sam has
    instructed the company to apply his dividends to the policy to increase the death
    benefit. The dividend option that Sam has chosen is called
    a One year term purchase.

    b Accumulation at interest.

    c Reduction of premiums.

    d Paid-up additions.
  2. 2: The paid-up addition option uses
    the dividend
    • a To accumulate additional savings
    • for retirement.

    • b To purchase a smaller amount of
    • the same type of insurance as the original policy.

    • c To purchase a one-year term
    • insurance in the amount of the cash value.

    d To reduce the next year’s premium.
  3. 3: Which statement regarding the
    One-Year Term Dividend Option is true?
    • a The dividend is used to purchase
    • an additional policy in the amount of the cash value.

    • b When the policyholder dies, the
    • beneficiary receives both the cash value and the dividend.

    • c The interest on the dividend is
    • used to purchase an additional policy.

    d A new policy is in a one-year format
  4. 4: Because of financial obligations,
    John felt that he needed more insurance than the insurer was willing to issue.
    John's insurance producer told him that he could maximize the death benefit
    without increasing the face amount by the use of a
    a Payor rider.

    b Waiver of premium rider.

    c Automatic premium loan rider.

    d Return of premium rider.
  5. 5:
    All of the following are Nonforfeiture options EXCEPT
    a Reduced paid-up

    b Interest only

    c Cash surrender

    d Extended term
  6. 6: Which of the following is
    guaranteed to the policyowner through nonforfeiture values?
    • a The premiums on their policy will
    • never increase.

    • b The cash value in a policy belongs
    • to the insured even if the policy lapses or is surrendered.

    • c Dividends on the policy are paid
    • yearly.

    • d A beneficiary has the right to
    • choose a settlement option.
  7. 7: What is the benefit of choosing
    extended term as a nonforfeiture option?
    a It matures at age 100

    • b It allows for coverage to continue
    • beyond maturity date

    • c It can be converted to a fixed
    • annuity

    • d It has the highest amount of
    • insurance protection
  8. 8: Which of the following determines
    the length of time that benefits will be received under the Fixed Amount
    settlement option?
    a Size of each installment

    • b Predetermined length of time
    • stipulated in the contract

    c Length of income period

    d Amount of interest
  9. 9: Which nonforfeiture option
    provides coverage for the longest period of time?
    a Accumulated at interest

    b Reduced paid-up

    c Extended term

    d Paid-up option
  10. 10: What is true about nonforfeiture
    • a They are required by state law to
    • be included in the policy.

    b They are optional provisions.

    • c A table showing nonforfeiture
    • values for the next 10 years must be included in the policy.

    • d Policyowners do not have the
    • authority to decide how to exercise nonforfeiture values.
  11. 12: An insured receives an annual
    life insurance dividend check. What term best describes this arrangement?
    a Reduction of Premium

    b Annual Dividend Provision

    c Accumulation at Interest

    d Cash option
  12. 13: An insured owns a $50,000 whole
    life policy. At age 47, the insured decides to cancel his policy and exercise
    the extended term option for the policy's cash value. What would be the face
    value of the new term policy?
    a $47,500

    b $50,000

    c $25,000

    d Varies from company to company
Card Set
life policy provisions
policy provisions riders and options