Chapter 4: poliCy provisions, options
and riders (exam 2)
A waiver of premium rider allows an insured to waive premium payments if the insured is
A) temporarily disabled
B) unemployed
C) completely and permanently disabled
D) experiencing financial hardship - Answer: C) completely and permanently disabled
Which of the following is NOT a common life insurance policy rider?
A) extended term
B) automatic premium loan
C) waiver of premium
D) accidental death - Answer: A) extended term
A policyowner may exercise which of these dividend options that uses the dividend to pay all or
part of the next premium due?
A) Reduction of premium dividend option
B) Extended term option
C) Paid-up option
D) Cash dividend option - Answer: A) Reduction of premium dividend option
If an insured's age on a life insurance policy has been misstated, what is the insurer's liability if
the insured dies?
,Chapter 4: poliCy provisions, options
and riders (exam 2)
A) No death benefit is owed because of the misstatement of age
B) The full original death benefit listed on the policy
C) A prorated death benefit based on the amount of insurance the insured's premiums would
have been if purchased at the correct age
D) The original death benefit listed on the policy minus any outstanding loans and interest -
Answer: C) A prorated death benefit based on the amount of insurance the insured's premiums
would have been if purchased at the correct age
What is the name of the provision which states that a copy of the application must be attached
to the policy when issued?
A) Policy Summary
B) Buyer's Guide
C) Entire Contract
D) Entire Policy - Answer: C) Entire Contract
A provision that allows a policyowner to temporarily give up ownership rights to secure a loan is
called a(n)
A) automatic premium loan
B) nonforfeiture option
C) collateral assignment
D) irrevocable assignment - Answer: C) collateral assignment
Of the following dividend options, which of these is taxable?
, Chapter 4: poliCy provisions, options
and riders (exam 2)
A) Reduction of premium
B) One year term
C) Paid-up additions
D) Accumulation at interest - Answer: D) Accumulation at interest
Joanne has a $100,000 whole life policy with an accumulated $25,000 of cash value. She would
like to borrow $15,000 against the cash value. Which of the following statements is TRUE?
A) Net death benefit will be reduced if the loan is not repaid
B) No interest will be charged on loan balance
C) Term life policies are the only type of insurance that allows policy loans
D) A loan can be taken out for up to the face amount of the policy - Answer: A) Net death
benefit will be reduced if the loan is not repaid
Life insurance policies will normally pay for losses arising from
A) commercial aviation
B) war
C) suicide
D) hazardous jobs - Answer: A) commercial aviation
A provision in a whole life policy that allows a policyowner to terminate the policy in return for a
reduced paid-up policy of the same type is called a(n)
A) insuring clause
and riders (exam 2)
A waiver of premium rider allows an insured to waive premium payments if the insured is
A) temporarily disabled
B) unemployed
C) completely and permanently disabled
D) experiencing financial hardship - Answer: C) completely and permanently disabled
Which of the following is NOT a common life insurance policy rider?
A) extended term
B) automatic premium loan
C) waiver of premium
D) accidental death - Answer: A) extended term
A policyowner may exercise which of these dividend options that uses the dividend to pay all or
part of the next premium due?
A) Reduction of premium dividend option
B) Extended term option
C) Paid-up option
D) Cash dividend option - Answer: A) Reduction of premium dividend option
If an insured's age on a life insurance policy has been misstated, what is the insurer's liability if
the insured dies?
,Chapter 4: poliCy provisions, options
and riders (exam 2)
A) No death benefit is owed because of the misstatement of age
B) The full original death benefit listed on the policy
C) A prorated death benefit based on the amount of insurance the insured's premiums would
have been if purchased at the correct age
D) The original death benefit listed on the policy minus any outstanding loans and interest -
Answer: C) A prorated death benefit based on the amount of insurance the insured's premiums
would have been if purchased at the correct age
What is the name of the provision which states that a copy of the application must be attached
to the policy when issued?
A) Policy Summary
B) Buyer's Guide
C) Entire Contract
D) Entire Policy - Answer: C) Entire Contract
A provision that allows a policyowner to temporarily give up ownership rights to secure a loan is
called a(n)
A) automatic premium loan
B) nonforfeiture option
C) collateral assignment
D) irrevocable assignment - Answer: C) collateral assignment
Of the following dividend options, which of these is taxable?
, Chapter 4: poliCy provisions, options
and riders (exam 2)
A) Reduction of premium
B) One year term
C) Paid-up additions
D) Accumulation at interest - Answer: D) Accumulation at interest
Joanne has a $100,000 whole life policy with an accumulated $25,000 of cash value. She would
like to borrow $15,000 against the cash value. Which of the following statements is TRUE?
A) Net death benefit will be reduced if the loan is not repaid
B) No interest will be charged on loan balance
C) Term life policies are the only type of insurance that allows policy loans
D) A loan can be taken out for up to the face amount of the policy - Answer: A) Net death
benefit will be reduced if the loan is not repaid
Life insurance policies will normally pay for losses arising from
A) commercial aviation
B) war
C) suicide
D) hazardous jobs - Answer: A) commercial aviation
A provision in a whole life policy that allows a policyowner to terminate the policy in return for a
reduced paid-up policy of the same type is called a(n)
A) insuring clause
