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Chapter 12

Self-Assessment Quiz

Self-Assessment Quiz


This activity contains 10 questions.

	One life insurance policy provision specifies that the insurer cannot deny payment to the beneficiary because of concealment or misrepresentation if the life insurance policy has been in force for two years during the insured’s lifetime. This provision is the   entire contract clause. assignment clause. incontestable clause. ownership clause.

	All of the following are nonforfeiture options EXCEPT   reduced paid-up insurance. extended term insurance. cash value. paid-up additions.

	Which of the following statements is (are) true regarding life insurance policyowner dividends? Life insurance policies that pay dividends to policyowners are called participating policies. Life insurance policyowner dividends are guaranteed.   I only II only both I and II neither I nor II

	Sheila would like to purchase a cash value life insurance policy. She is concerned, however, that if she becomes disabled she will be unable to pay the premiums as they come due. What provision can Sheila add to her policy to address this concern?   reinstatement provision waiver-of-premium rider guaranteed purchase option accelerated death benefits rider

	One life insurance policy provision permits the policyowner to pledge certain rights in the life insurance policy to secure a loan. This provision is called a(n)   absolute assignment. entire contract clause. policy loan provision. collateral assignment.

	Which of the following statements is (are) true with respect to life insurance policy loans? Interest must be paid on life insurance policy loans. If a policy loan has not been repaid when the insured dies, the outstanding loan balance is deducted from the proceeds paid to the beneficiary.   II only neither I nor II I only both I and II

	All of the following are optional methods of settlement after the insured has died EXCEPT   cash (lump sum). reduced paid-up insurance. fixed-period option. life income option.

	Eric purchased a cash value life insurance policy six years ago. He forgot to pay the premium that was due last week. Eric’s coverage is still in force because of which life insurance policy provision?   grace period provision reinstatement provision entire contract clause incontestable clause

	Elaine was diagnosed with a terminal illness. Her doctor said that her only chance of survival is an experimental treatment. The treatment is expensive and is not covered by Elaine’s health insurance. Which life insurance policy provision will permit Elaine to use the life insurance proceeds before she dies to pay for her medical care?   cost of living rider guaranteed purchase option accidental death benefit rider accelerated death benefits rider

	Under which nonforfeiture option will permanent life insurance coverage be in force after the nonforfeiture option is exercised?   cash value option extended term insurance reduced paid-up insurance fixed-amount option

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