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) […]
Bruce lied about his health history when he purchased a life insurance policy. He died 3 years after the policy was issued. Which life insurance policy provision will require the life insurer to pay the beneficiary even though Bruce lied on the application? A) incontestable clause B) entire contract clause C) ownership clause D) change-of-plan […]
Which of the following statements about nonforfeiture options found in life insurance policies is true? A) Under the reduced paid-up option, the paid-up policy is term insurance. B) Under the extended term option, the amount of term insurance is less than the face value of the surrendered cash value policy. C) Under the reduced paid-up […]
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? A) nonforfeiture options B) entire contract clause C) incontestable clause D) ownership clause ANSWER Answer: D
A contingent beneficiary in a life insurance policy has the right to A) receive the policy proceeds if the primary beneficiary dies before the insured. B) share the policy proceeds with the primary beneficiary. C) change the beneficiary designation under specified circumstances. D) exercise policy rights if the insured is incapacitated. ANSWER Answer: […]
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. A) […]
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. A) I only B) II only C) both I […]
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. A) I only B) II only C) both I and II D) neither I nor II […]
Advantages of selecting the paid-up additions dividend option in a life insurance policy include which of the following? I. Evidence of insurability is not required to purchase additional insurance. II. The additions are purchased at net rates without a loading for expenses. A) I only B) II only C) both I and II D) neither […]
Which of the following dividend options, sometimes called the “fifth dividend option,” is not offered by all insurers that sell participating life insurance coverage? A) paid-up additions B) reduction of premiums C) accumulation of dividends at interest D) term insurance ANSWER Answer: D
