ExamFX Life chapter 3 Questions With Complete Solutions

What nonforfeiture option is automatically selected by the company if not chosen by the policyowner? correct answer: Extended term Is the beneficiary required to have insurable interest in the insured? correct answer: No. beneficiaries do not have insurable interest in the insured What dividend option is automatically selected by the company if not chosen by the policyowner? correct answer: Paid-up additions If a settlement option is not chosen by the policy owner or the beneficiary, what option will be used by the insurer? correct answer: Lump-sum payment What are policy dividends? correct answer: Return of unused premiums What happens to a policy's cash value under an extended term nonforfeiture option? correct answer: The cash value is converted to the same face amount as in the whole policy A policyowner borrowed a portion of cash value from his whole life policy. If the loan is not repaid, how will that affect the death benefit to the beneficiary? correct answer: The amount of the loan will be subtracted from the death benefit. To meet the requirement of the entire contract policy provision, an insurance policy must contain what? correct answer: A copy of the original insurance application What is the purpose of settlement options in life insurance policies? correct answer: To determine how the death benefit will be paid to the beneficiary What type of beneficiary can be changed at any point by the policyowner? correct answer: Revocable What settlement options are available in life insurance policies?