If he dies, how will the adjusted death benefit be calculated? The above question All of the following are considered to be nonforfeiture options available to a policyowner EXCEPT, Was part of Insurance MCQs & Answers. You dont have to worry about it anymore. Whole life insurance is permanent life insurance that pays a benefit upon the death of the insured and is characterized by level premiums and a savings component. the benefit can be offered as a rider at a specific extra cost or may be at no cost. A Its premium steadily decreases over time, in response to its growing cash value. Whose life is covered on a life insurance policy that contains a payor benefit clause? Reduced Paid-Up Instead, there are four options that the owner can choose from in order to access the accumulated cash value. It stipulates that a policy owner will receive partial or full benefits or a refund of premium paid towards a whole life insurance policy if the policy lapses due to non-payment. 3. b) Cash Surrender If a policy owner has continually made premium payments for a sufficient amount of time, a forfeiture clause might become active in one of two ways. The option that provides an additional death benefit for a limited amount of time at the lowest possible cost is called a(n), Accidental Death and Dismemberment rider (AD&D). Salaries and Wages Payable. The same face amount as in the whole life policy. Deducted based on the income level. CFI is the official provider of the global Commercial Banking & Credit Analyst (CBCA) certification program, designed to help anyone become a world-class financial analyst. Which of these actions will the insurer take? 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Usually, permanent life insurance generates low returns in the early years of the policy due to administrative and acquisition expenses. B) the policy would be payable only after the beneficiary makes past due premium payment a. B) Waiver of Premium B) Pay age-corrected benefits Elaine was diagnosed with a terminal illness. An insurer will accept a premium from the insured and continue the coverage in full force as though it was NOT late during which time period? D) nonforfeiture provision, A whole life insurance policy accumulates cash value that becomes, A) the policy loan value which the insured may borrow against How Cash Value Builds in a Life Insurance Policy, Payout Options Under a Nonforfeiture Clause, Paid-Up Additional Insurance: Definition and the Role of Dividends, Life Insurance: What It Is, How It Works, and How To Buy a Policy, Whole Life Insurance Definition: How It Works, With Examples, Policy Loan: Definition, How They Work, Benefits, and Downsides. A) A return of excess premium and partially taxable \text { Accounts Receivable } & 15,900 & \\ Grace period terms are stated in the policy. In the early years of a policy, life insurance companies can deduct fees upon cash surrender. A nonforfeiture clause is an insurance policy clause stipulating that an insured party can receive full or partial benefits or a partial refund of premiums after a lapse due to nonpayment.. at future dates specified in the contract with no evidence of insurability required, Additional coverage can be added to a Whole Life policy by adding a(n). Which of the following protects a policyowner from a misrepresentation caused by an innocent mistake? Ron's health insurance will not pay the full amount charged by the non-PPO doctor. The policyowner wants to make sure that upon his death, the life policy will pay a portion of the proceeds annually to his spouse, but that the principal will be paid to their children when they reach a certain . All of the following are dividend options EXCEPT: Fixed-period installments. B) absolute assignment The series is called All or Nothing. D) Extended term rider, In a life insurance policy, the entire contract consists of, A) policy and conditional receipt Dorian exercised a nonforfeiture option by using his life policys cash value to purchase an extended term insurance option. until after the adjusting entries are made? policy has a decreased face amount A life insurance policyowner does NOT have the right to. Mike buys a 10-year renewable term policy. 2. What does the guaranteed insurability option allow an insured to do? B) Nonparticipating policies issue dividends b) The key employee has premiums deducted from his salary. What does the grace period allow a life insurance policyowner to do? Must have a terminal illness to qualify. What action will the insurer take? D) Provision. a The premiums on their policy will never increase. A) $400 What action will an insurer take if an interest payment on a policy loan is not made on time? The policy would retain a cash value component, but it would grow at a reduced rate. B) war Which military service exclusion clause would pay upon his death? Which of these is NOT a type of agent authority? dividend amount used toward purchase C) There may be a dollar limit on the maximum benefit C) Return of premium C) transferable assignment If the consumer price index has gone up 4%, how much may Ron increase the face value of the policy? A double indemnity benefit will be payable to Matts beneficiary if Matt, A) is killed while committing a felony A) $400 B) $800 C) $2,000 D) $4,000. Cookies collect information about your preferences and your devices and are used to make the site work as you expect it to, to understand how you interact with the site, and to show advertisements that are targeted to your interests. Under which nonforfeiture option will permanent life insurance coverage be in force after the nonforfeiture option is exercised? A long-term care rider in a life insurance policy pays a daily benefit in the event of which of the following? Quickly and professionally. Required fields are marked *, All of the following are considered to be nonforfeiture options available to a policyowner EXCEPT. D) provide a valid reason for the lapse, B) provide evidence of insurability to the insurer. Cash Value vs. B) Waiver of premium rider A sub-agent cannot take or sign an application. C) Results Which provision prevents an insurer from changing the terms of the contract with the policyowner by referring to documents not found within the policy itself? Which statement is true regarding policy dividends? A) Policy Summary B) Extended term option D) Premiums must continue to be paid. Extended-term insurance is often thedefault non-forfeiture option. Which of these provisions require proof of insurability after a policy has lapsed? c) The agent An agent represents the company. Waiver of Premium Which of these would be considered a Limited-Pay Life policy? Insured must be eligible for Social Security disability for claim to be accepted With extended-term insurance, the face amount of the policy stays the same, but it is flipped to an extended-term insurance policy. Policy loans may still be made 2003-2023 Chegg Inc. All rights reserved. With the extended term option, you can choose to use the cash value in a whole life insurance policy to term insurance, allowing you to stop paying premiums. D) The original death benefit listed on the policy minus any outstanding loans and interest, C) A prorated death benefit based on the amount of insurance the insureds premiums would have been if purchased at the correct age. Which of these describe a participating life insurance policy? B) accumulate without interest Which provision would keep the policy in force if S does not make the required payment and the policy has adequate cash value from which the premium payment can be made? D) the protection ends. After reading about the changes in the government's role in the economy, write a one-page essay arguing whether you think those changes are helpful or harmful to the U.S. economy. C) Guaranteed insurability All of the following are considered to be nonforfeiture options available to a policyowner EXCEPT Options a) Extended Term Insurance b) Cash Surrender c) Reducation of Premium d) Reduced Paid-Up Insurance Answer: c) Reduction of Premium d) 6 months Pre-existing conditions must be covered after a policy has been in force for 6 months. Required fields are marked *. Ike purchases a whole life policy. A) Grace period D) Cash dividend option. However, any money you take out will be deducted from the death benefit that goes to your beneficiaries. Nonforfeiture values give the insured the right to the cash value even if the policy lapses or is surrendered. C) Dividend schedule D) Accumulation at interest. If the teacher wants an increasing Death Benefit to protect against inflation, the teacher should select which of the following Dividend Options? B) suicide When assessing a client with partial-thickness burns over 60% of the body, which finding should the nurse report immediately? Let us have a look at your work and suggest how to improve it! Each brother purchases a life policy that has a $750 annual premium. g. Income taxes of$55,539 are owed but unrecorded and unpaid. b) Variable life Because variable life policies invest in the insurer's separate accounts and allow the policyowner to choose specific investment strategies, the interest rates will fluctuate depending upon the performance of the investments. Taxable C. Nontaxable D. Tax Deductible B. Paid-up additional insurance is whole life insurance that a policyholder purchases using the policys dividends. Which of these arrangements allows one to bypass insurable interest laws? B) the death benefit J let her life insurance policy lapse 8 months ago due to nonpayment. \text { Rent Expense } & 229,000 & \\ A nonforfeiture clause is an insurance policy clause that is included in standard life insurance and long-term care insurance. C) Allows for a full refund after policy delivery A person may have a vested interest in property to be forfeit in two ways: In personum jurisdiction and in rem jurisdiction. A) Martial status The policyholder will receive a partial or full refund of premiums paid if the policy lapses after a defined period due to missed premium payments. computer. Refer to the earlier problem. c) The business is the owner and beneficiary of the policy. Which of the following provisions guarantees that premiums will be waived if a Juvenile Life policyowner becomes disabled? Who does the sub-agent represent? A) Cash surrender Cash surrender value is the accumulated portion of a permanent life insurance policy's cash value that is available to the policyholder upon surrender of the policy. reduced paid-up insurance. Which type of beneficiary is changeable at any point? A) The policys cost basis is taxable C) Policys cash value is not affected P is the insured on a participating life policy. Work with our consultant to learn what to alter, Chapter 4- Policy Provisions, Options and Riders (Exam 2). C) The entire cash value is taxable Universal life (UL) insurance is permanent life insurance with an investment savings component. $50,000 minus any outstanding policy loans. The amount of cash value you will have built-in your policy will be reduced by the amount of any loans against your life insurance. When the term insurance expires, A) he has the option of resuming the original policy and paying the same premium A provision that allows a policyowner to temporarily give up ownership rights to secure a loan is called a Pat owns a 20-pay life policy with a paid-up dividend option. I. How do life insurance companies handle cases where the insured commits suicide within the contracts stated Contestable period? C) waiver of premium Coverage will be adjusted to reflect the insureds true age if a misstatement of age is discovered. What are collateral assignments normally associated with? $100,000, L takes out a life insurance policy and dies 10 years later. Increased proceeds can be provided through accumulation of interest You can learn more about the standards we follow in producing accurate, unbiased content in our. Instead, you can access your accumulated cash value with the following options: If the policyholder does not make a selection, the terms of the policy will generally stipulate which option would go into effect if the policy lapses or is surrendered. Plot the fitted values on the horizontal axis and the residuals on the vertical axis. The meaning of NONFORFEITURE is failure or refusal to forfeit something often used before another noun. Under a life insurance policy, what does the insuring clause state? Which of these is NOT considered to be a nonforfeiture option in a whole life insurance policy? B) Extended term insurance When does a Guaranteed Insurability Rider allow the insured to buy additional coverage? What provision can Sheila add to her policy to address this concern? This provision is usually provided with an increase in premium Which of the following statements is CORRECT about accelerated death benefits? It is taxed as ordinary income. \end{array} What is an insurer required to do when faced with an error made under the Misstatement of Age provision? She died January 10 without making the premium payment. Financial Modeling & Valuation Analyst (FMVA), Commercial Banking & Credit Analyst (CBCA), Capital Markets & Securities Analyst (CMSA), Certified Business Intelligence & Data Analyst (BIDA), Financial Planning & Wealth Management (FPWM). fare-paying passenger. The extended-term insurance also helps the policy owner to quit paying premiums for the original policy, but retain the equity accumulated in the policy. D) Nonforfeiture options. Please check below to know the answer. A) extended term D) Make a policy loan interest payment after the due date without any loss of coverage, B) Make a premium payment after the due date without any loss of coverage. The Consideration clause in a life insurance contract contains what pertinent information? 609.5315. C) suicide D) Accelerated death benefit, Barbaras policy includes a rider which allows her to purchase additional insurance at specific dates or events without evidence of insurability. See the bus stats for the Lincolnville School District. D is the policyowner and insured for a $50,000 life insurance policy. B) The insurer withholds the cost basis Both are in excellent health. All of the following statements are true regarding a policy's Grace period EXCEPT Past due premiums are waived Policy loans may still be made Full coverage continues Grace period terms are stated in the policy D) pay past due premiums, agree to a reduction in coverage, B) provide evidence of insurability, pay past due premiums. C) Reinstatement period The following situations involve some form of discrimination. D) the right to return the policy for a full refund within a specified number of days, D) the right to return the policy for a full refund within a specified number of days, The double indemnity provision in a life insurance policy pertains to an insureds death caused by a(n), A) sickness N dies September 15. A) Reduction of premium c) Reducation of Premium Explain your reasons. Which of the following is a restatement condition? B) military service It is not taxable h. Supplies. S dies 5 years later in 2008 and the insurer pays the beneficiary $10,500. To keep advancing your career, the additional CFI resources below will be useful: Within the finance and banking industry, no one size fits all. C) It allows for cash advances to be paid against the death benefit if the insured becomes terminally ill She has been working in the financial planning industry for over 20 years and spends her days helping her clients gain clarity, confidence, and control over their financial lives. B) It allows for policy loans to be advanced to the insured in the event of unemployment In permanent life insurance, the policyholder will not lose the life insurance policy entirely. All of the following statements are true EXCEPT, A) Mikes policy will develop no cash value over the policys term \text { Other Assets } & 60,900 & \\ Insurance companies can charge an interest rate based on the policyowners credit report, Past-due interest on a policy loan is added to the total debt. What is the name of the provision which states that a copy of the application must be attached to the policy when issued? B) The insurers obligation to return all premiums upon an approved death claim This year, it will be nothing.Via Ben Fischer of Sports Business Journal, the Amazon Prime series that follows an NFL team through a full season current is in . Set the qualitative parameters if the engine type is gasoline. All of these are valid policy dividend options for a life insurance policyowner EXCEPT Kurt is an active duty serviceman who was recently killed in an accident while home on leave. He forgot to pay the premium that was due last week. B) automatic premium loan D) Cash surrender. Which of the following statements about accumulated interest earned on dividends from an insurance policy is TRUE? A) Cancel the policy D) It allows for a third party to purchase a life insurance policy at a discounted rate and immediately advance a portion of the death benefit, C) It allows for cash advances to be paid against the death benefit if the insured becomes terminally ill. A life insurance policy can be surrendered for its cash value under which policy provision? Azanswer team is here with the correct answer to your question. A policy loan is issued by an insurance company and uses the cash value of a life insurance policy as collateral. a) The company b) The insured c) The agent d) The counselor. 1. Interest for the period For example, if you purchase a policy when you were 20 and you paid until age 55, you would receive a term policy that is less than 35 years. When the insured dies or at the policys maturity date, whichever happens first, The provision that can be used to put an insurance policy back in force after it has lapsed due to nonpayment is called, All of these statements about the Waiver of Premium provision are correct EXCEPT B) Face amount of the new policy equals that of the original policy D) any surrender charges owed by the policyowner, B) past due premiums that have not been paid by the end of the grace period. B) Make a premium payment after the due date without any loss of coverage All of these would be factors that determine how much coverage can be purchased EXCEPT However, surrendering a portion of the cash value reduces thedeath benefit. Use the accumulated cash value to pay the remaining future premiums. You can find out more about our use, change your default settings, and withdraw your consent at any time with effect for the future by visiting Cookies Settings, which can also be found in the footer of the site. D) Income, A life insurance policy normally contains a provision that restricts coverage in the event of death under all of the following situations EXCEPT, A) fare-paying passenger All of the following are optional methods of settlement after the insured has died EXCEPT. When a policy is in force for a longer duration, the better the cash values and the nonforfeiture values. Which of these are NOT an example of a Nonforfeiture option? A) Declarations ", "Standard nonforfeiture law for life insurance.". Overall, it's the accumulated portion of a permanent life insurance policy's cash value that is available to the policyholder upon surrender of the policy. Unpaid interest will be added to your loan amount and will be subject to compounding. A) Contest the terms of the policy after the issue date How are policyowner dividends treated in regards to income tax? A) Incontestable period A) The original face amount will be paid to the beneficiary C) Waivers a) Modified life b) Variable life c) Ordinary life d) Graded premium whole life. \text { Note Payable (due 2022) } & & 50,000 \\ The policy owner does not forfeit the previous payments and is entitled to receive the policys cash value. . C) Extended term insurance An automatic premium loan is not considered a Nonforfeiture Option. Indicate whether each of the following items is a real or nominal account and whether it appears in the balance sheet or the income statement. B) select a beneficiary Which situation accurately describes a reduced paid-up nonforfeiture option? "Standard nonforfeiture law for life insurance.". B) Insuring provision A) Interest only Quickly and professionally. Standard life insurance and long-term care insurance policies may have a nonforfeiture clause. T took out a $50,000 life insurance policy with an Accidental Death and Dismemberment rider. Sometimes, a policy expires after a so-called grace period. D) irrevocable assignment. Under an extended term nonforfeiture option, the policy cash value is converted to answer choices A higher face amount than the whole life policy. e. Equipment. B) waiver of premium C) all past premiums will be refunded with interest 40% taxable, similar to a capital gain B. o paid - up additions extended term insurance . If an insured dies because of an accident, which type of life insurance rider will provide additional coverage? B) 1/2 of the policys face amount Opt for reduced coverage with a reduced death benefit for the remaining term of the insurance. Fixed Period B) provide evidence of insurability to the insurer A) Accidental death rider D) Bill the policyowner for back premiums. b) The key employee has premiums deducted from his salary. D) Certificate of Authority, All of these are valid policy dividend options for a life insurance policyowner EXCEPT, A) cash outlay to the policyowner Pay face amount minus the past due premium. P will still receive declared dividends Some companies offer an annuity option in the nonforfeiture clause. S has a Whole Life policy with a premium payment due soon. Your email address will not be published. from October 1 to December 31 is unpaid and unrecorded. In personum actions are against the owner of property, whereas in rem actions are taken . B) Probation period A) 12/15th of the policys face amount Minn. Stat. the policy may be paid up early by using policy dividends. Which of the following statements is (are) true regarding life insurance policyowner dividends? Jerry is an insured who understated his age on his life insurance application, paying $12 per $1,000 of insurance instead of $15 per $1,000. Under the Misstatement of Age provision, the insurer will, adjust the death benefit to a reduced amount, The incontestable clause allows an insurer to, contest a claim during the contestable period. A) Policy has a decreased face amount D) revoke an absolute assignment. D) buy additional insurance coverage, All of the following are considered to be nonforfeiture options available to a policyowner EXCEPT, A) Extended Term Insurance Coverage can be added at specific events such as marriage or having a child If an insureds age on a life insurance policy has been misstated, what is the insurers liability if the insured dies? Let us have a look at your work and suggest how to improve it! You are eligible for the reduced "paid up" contingent nonforfeiture benefit when all three conditions shown below are met: The premium you are required to pay after the increase exceeds your original premium by the same percentage or more shown in the chart below; Triggers for a Substantial Premium Increase Issue Age Under 65 65-80 Over 80 B) Payor rider All of the following are Nonforfeiture options EXCEPT: . D) Automatic premium loan provision, Matt is applying for life insurance and requests a double indemnity rider. Modify a provision in the insurance contract D) Monthly income payments. Inability of the insured to perform more than 2 Activities of Daily Living (ADLs), The Accidental Death and Dismemberment (AD&D) provision in a life insurance policy would pay additional benefits if the insured.
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