Question 1

Which of the following would be a valid reason for an insurer to contest a policy after the contestable period has ended?

Accepted Answer

A)  The policyholder made a material misrepresentation in the application process.
B)  The insurer's loss ratio is running higher than the insurer anticipated.
C)  The applicant had someone else take the medical examination required for policy approval for her.
D)  The policyholder concealed a material fact at the time of application.E) B) and D)
F) A) and B)

Question 2

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?

Accepted Answer

A)  absolute assignment
B)  extended term nonforfeiture option
C)  reinstatement
D)  collateral assignmentE) None of the above
F) A) and D) A

Question 3

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?

Accepted Answer

A)  incontestable clause
B)  entire contract clause
C)  ownership clause
D)  reinstatement clauseE) A) and C)
F) A) and B)

Question 4

Which of the following statements is (are) true regarding exclusions in life insurance contracts?
I.Life insurance policies are remarkably restrictive,including numerous exclusions.
II.A life insurer may exclude death attributable to certain activities or hobbies disclosed on the application.

Accepted Answer

A)  I only
B)  II only
C)  both I and II
D)  neither I nor IIE) All of the above
F) None of the above

Question 5

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)

Accepted Answer

A)  blended policy.
B)  indexed policy.
C)  joint life policy.
D)  endowment policy.E) None of the above
F) All of the above

Question 6

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.

Accepted Answer

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

Question 7

Which of the following statements regarding the accidental death benefit rider (also known as double indemnity) is true?

Accepted Answer

A)  Adding the accidental death benefit rider doubles the premium for the policy.
B)  Financial planners agree that adding the accidental death benefit rider is a wise purchase.
C)  The economic value of a human life is doubled or tripled if death is caused by an accident,justifying the purchase of the rider.
D)  The death benefit is doubled only if an accidental injury is the direct cause of death and death occurs prior to a specified age.E) B) and C)
F) All of the above

Question 8

All of the following are requirements that must be satisfied before premiums are waived under a waiver-of-premium provision EXCEPT

Accepted Answer

A)  The insured must furnish proof of disability to the insurer.
B)  The insured must be disabled before some specified age,such as age 60 or 65.
C)  The insured must satisfy the definition of disability.
D)  The insured must satisfy a 2-year waiting period.E) A) and D)
F) A) and C)

Question 9

What major feature distinguishes a participating policy from a nonparticipating policy?

Accepted Answer

A)  the availability of a waiver-of-premium provision
B)  the existence of settlement options
C)  the payment of dividends
D)  the method by which beneficiaries can be namedE) A) and B)
F) All of the above C

Question 10

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

Accepted Answer

A)  It is usually available with term insurance policies.
B)  The premium when an option is exercised is based on the insured's age at the time the original policy was issued.
C)  The option permits the insured to purchase specified amounts of life insurance in the future even if the insured has become uninsurable.
D)  If a guaranteed purchase option expires without being used,it can be exercised at a later date.E) A) and B)
F) A) and C)

Question 11

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?

Accepted Answer

A)  nonforfeiture options
B)  entire contract clause
C)  incontestable clause
D)  ownership clauseE) A) and B)
F) None of the above

Question 12

Which of the following statements about dividend options is (are) true?
I.The interest on dividends left to accumulate with the insurer is not considered to be taxable income.
II.Paid-up additions are additional units of whole life insurance.

Accepted Answer

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

Question 13

Which of the following statements about the change of plan provision in a life insurance contract is (are) true?
I.A change to a lower premium policy results in a refund of the difference in the cash values of the two policies.
II.A change to a higher premium policy requires evidence of insurability.

Accepted Answer

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

Question 14

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?

Accepted Answer

A)  lump sum
B)  fixed amount
C)  fixed period
D)  interest optionE) B) and D)
F) C) and D)

Question 15

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

Accepted Answer

A)  Because the probability of becoming disabled exceeds the probability of premature death,the cost to include this provision is usually prohibitive at younger ages.
B)  Premiums are usually waived if the insured becomes partially disabled.
C)  Life insurance protection continues in force during a period of disability,but dividends cease and cash values are reduced.
D)  The disability must occur before a stated age,such as 65,for premiums to be waived.E) A) and C)
F) A) and B)

Question 16

Bruce,age 62,was approached by a representative of a group of investors.The representative asked Bruce to purchase a large life insurance policy which the investor group would purchase from Bruce.Bruce doesn't need life insurance.The investor representative told Bruce to tell the agent he needed the policy for estate liquidity.Bruce purchased the policy,and then sold it to the investor group.The arrangement described in this scenario is called a(n)

Accepted Answer

A)  stranger-owned life insurance policy.
B)  life settlement.
C)  absolute assignment of a life insurance policy.
D)  viatical settlement.E) C) and D)
F) B) and C)

Question 17

A life insurance contractual provision protects the beneficiary by not permitting the insurer to introduce outside information to deny payment of the claim.Such outside information might be notes that the agent took while the insured completed the application.This contractual provision is the

Accepted Answer

A)  entire contract clause.
B)  incontestable clause.
C)  reinstatement clause.
D)  change-of-plan provision.E) B) and C)
F) All of the above

Question 18

Which of the following is a standard nonforfeiture option?

Accepted Answer

A)  paid-up additions
B)  life income
C)  extended term insurance
D)  reduction of premiumsE) A) and D)
F) B) and C)

Question 19

Malcolm would like to purchase life insurance.He is concerned that he might need additional life insurance in the future and that he might be uninsurable at that time.What provision can Malcolm add to his life insurance policy that will permit him to purchase additional life insurance at specified times in the future without providing evidence of insurability?

Accepted Answer

A)  double indemnity rider
B)  guaranteed purchase option
C)  waiver-of-premium provision
D)  accelerated death benefits riderE) None of the above
F) A) and B) B

Question 20

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

Accepted Answer

A)  Loans are only permitted for specific reasons listed in the policy.
B)  They are forgiven if the insured dies before the loans are repaid.
C)  The policyholder must pay interest on a life insurance policy loan.
D)  They must be repaid on the basis of a schedule determined at the time of the loan.E) B) and D)
F) B) and C)

Exam 12: Life Insurance and Contractual Provisions

Which of the following would be a valid reason for an insurer to contest a policy after the contestable period has ended?

Correct Answer
verified

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?

Correct Answer
verified
A

Correct Answer
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Which of the following statements is (are) true regarding exclusions in life insurance contracts? I.Life insurance policies are remarkably restrictive,including numerous exclusions. II.A life insurer may exclude death attributable to certain activities or hobbies disclosed on the application.

Correct Answer
verified

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)

Correct Answer
verified

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.

Correct Answer
verified

Which of the following statements regarding the accidental death benefit rider (also known as double indemnity) is true?

Correct Answer
verified

All of the following are requirements that must be satisfied before premiums are waived under a waiver-of-premium provision EXCEPT

Correct Answer
verified

What major feature distinguishes a participating policy from a nonparticipating policy?

Correct Answer
verified
C

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

Correct Answer
verified

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?

Correct Answer
verified

Which of the following statements about dividend options is (are) true? I.The interest on dividends left to accumulate with the insurer is not considered to be taxable income. II.Paid-up additions are additional units of whole life insurance.

Correct Answer
verified

Correct Answer
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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?

Correct Answer
verified

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

Correct Answer
verified

Correct Answer
verified

A life insurance contractual provision protects the beneficiary by not permitting the insurer to introduce outside information to deny payment of the claim.Such outside information might be notes that the agent took while the insured completed the application.This contractual provision is the

Correct Answer
verified

Which of the following is a standard nonforfeiture option?

Correct Answer
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Correct Answer
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B

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

Correct Answer
verified

Exam 12: Life Insurance and Contractual Provisions

Which of the following would be a valid reason for an insurer to contest a policy after the contestable period has ended?

Correct AnswerverifiedShow Answer

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?

Correct AnswerverifiedA

Correct AnswerverifiedShow Answer

Which of the following statements is (are) true regarding exclusions in life insurance contracts? I.Life insurance policies are remarkably restrictive,including numerous exclusions. II.A life insurer may exclude death attributable to certain activities or hobbies disclosed on the application.

Correct AnswerverifiedShow Answer

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)

Correct AnswerverifiedShow Answer

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.

Correct AnswerverifiedShow Answer

Which of the following statements regarding the accidental death benefit rider (also known as double indemnity) is true?

Correct AnswerverifiedShow Answer

All of the following are requirements that must be satisfied before premiums are waived under a waiver-of-premium provision EXCEPT

Correct AnswerverifiedShow Answer

What major feature distinguishes a participating policy from a nonparticipating policy?

Correct AnswerverifiedC

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

Correct AnswerverifiedShow Answer

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?

Correct AnswerverifiedShow Answer

Which of the following statements about dividend options is (are) true? I.The interest on dividends left to accumulate with the insurer is not considered to be taxable income. II.Paid-up additions are additional units of whole life insurance.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A life insurance contractual provision protects the beneficiary by not permitting the insurer to introduce outside information to deny payment of the claim.Such outside information might be notes that the agent took while the insured completed the application.This contractual provision is the

Correct AnswerverifiedShow Answer

Which of the following is a standard nonforfeiture option?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedB

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

Correct AnswerverifiedShow Answer

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A

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C

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B

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