Explain how dividends may be used when distributed to the policy owner in a participating contract.
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Explain briefly the operation of the guaranteed insurability rider, the waiver of premium rider, and the double indemnity rider.
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The age of the beneficiary is a factor used to calculate the amount paid from a life insurance policy under the ________ settlement option.
A) life income
B) interest
C) fixed amount
D) fixed
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Cheryl buys a life insurance policy with a two-year incontestable clause, and dies three years later. When she dies, her insurer discovers that she lied on application for coverage about her diabetes. What will happen?
A) The insurer will pay the claim.
B) The insurer will void the policy and not pay the claim because Cheryl made a material misrepresentation on her application.
C) The insurer will void the policy and not pay the claim based on the principle of indemnity.
D) Both B and C above
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The guaranteed insurability option allows the insured to:
A) purchase additional amounts of life insurance without proof of insurability
B) purchase life insurance for his friends without proof of insurability
C) retain coverage even if the insurer learns that the insured lied on the insurance application
D) receive a discount for taking an extensive physical examination before coverage begins
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Choose the false statement.
A) The insured need never repay a policy loan, nor is he required to pay interest on the loan.
B) The insured usually has the right to borrow 80% of the face value of an ordinary life insurance policy.
C) Unpaid policy loans are deducted from the beneficiary's proceeds if the insured dies.
D) Life insurance companies cannot refuse to make policyholder loans on policies that have loan values.
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What is/are the advantage(s) to purchasing an annuity from your life insurer by using the cash value in your whole life policy, rather than cashing in the policy and using the withdrawn cash values to purchase an annuity from another company?
A) No new acquisition costs are charged, and possibly better annuity assumptions
B) No new acquisition costs are charged, and annuity prices are guaranteed to be low
C) No new acquisition costs is the only advantage
D) Cheaper annuity pricing is the only advantage
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Which of the following is true?
A) The life insurance grace period gives the insured two months during which to correct any misinformation supplied in the application for coverage.
B) If the insured misstates his/her age on a life insurance application, the insurer has grounds for voiding the contract.
C) The purpose of the beneficiary clause in life insurance is to enable the policy owner to designate to whom the proceeds shall be paid when the insured dies.
D) The life insurance assignment clause requires that the policy owner get the insurer's consent before assigning policy ownership to someone else.
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Which of these is the least appropriate use for whole life insurance?
A) Mortgage retirement fund
B) Dependent spouse income fund
C) Retirement need
D) Emergency fund
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Which statement about variable universal life insurance is false?
A) Relatively small premiums are collected on a frequent basis.
B) They provide policyowners with more alternatives for investing cash values in their whole life policies.
C) They can duplicate universal life insurance.
D) Individual policies are large since it is purchased for employees by their unions.
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