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L&H4
| Question | Answer |
|---|---|
| A married couple is interested in a life insurance policy settlement option that will guarantee them both an income for as long as they live, an amount which reduces to 2/3 of that initial amount after one of them dies. What should they select? | Life Income Joint and Survivor: pays a periodic benefit until the last surviving recipient dies: may be diff value depending on who dies |
| wh?/ part of the contract identifies the parties to the contract and the perils it covers and the circumstances under which the insurer will pay a life insurance policy claim? | insuring clause |
| What is the main purpose of backdating a policy? To provide the agent with more up-front commissions B To save age C To gather more premium from the customer D To build more equity in the policy | To save age: A policy can be backdated no more than 6 months to save age. This will require back premiums to be paid as well. |
| The _________ clause states what each party exchanges in the contract. | Consideration |
| Cranston wants a Settlement Option for his beneficiary that will guarantee the beneficiary an income as long as the beneficiary lives. Cranston should choose: | Life Income Only The option that will guarantee the beneficiary an income as long as she/he lives is Life Income Only. |
| If the beneficiary is concerned about a particular amount of cash flow each month, the _______ settlement option should be selected. | Fixed Amount: Fixed Amount Payments are for a specified dollar amount paid monthly until the benefits along with interest are exhausted. An increase in declared interest will extend the time period in which the benefits are paid. |
| Alice is the insured, Bill is the primary beneficiary, and Claire is the contingent beneficiary. Bill dies, then Claire dies, then Alice dies, who receives proceeds? A Claire B The treasury of the state where Alice lives C Alice's estate D Bill | Alice's estate: no surviving beneficiaries |
| The name of the beneficiary designation that will pay a deceased beneficiary's share to the heirs of that beneficiary who predeceases the insured is called: | Per stirpes: Per stirpes is known as through the roots so the heirs of a deceased beneficiary will stand in for them and collect the deceased beneficiary's share of the proceeds. |
| Alice is the insured, Bill is the primary beneficiary, and Claire is the contingent beneficiary. Bill dies, then Alice dies, so who receives the policy proceeds? | Claire: Since Claire outlived Bill and Alice, then Claire is next in line to receive the policy proceeds. |
| When a policy lapses due to nonpayment of premium, which nonforfeiture option is the automatic option? | Extended term: Automatic premium loan is a policy provision which must be elected by the policyowner in advance of the policy lapsing. |
| Taxation applies to any ________ on the cash value paid out as a withdrawal of a Universal Life policy. | Interest: Taxation applies to any interest on the cash value paid out as a withdrawal. In other words, any amount paid in excess of the premium is subject to taxation. |
| The ____________ provision prevents a Whole Life Policy from lapsing, as long as there is adequate cash value, if the insured/policyowner forgets to pay the premium by the end of the grace period. | Automatic Premium Loan: APL gives the insr right to borrow funds from the cash value to prevent a policy lapse. This works only if adequate cash value is available. According to the contract, a policy loan may include annual prepaid interest. |
| What happens if a premium due is not paid before the end of the grace period? | The policy lapses |
Created by:
rachel krystopowicz