LOMA 281 Module 3 Questions with
Complete Solutions
Reinstatement provision Correct Ans-An individual life insurance provision that describes the
conditions the policyowner must meet to put the policy back into force after it has been
terminated because of nonpayment of renewal premiums or has been continued under the
extended term or reduced paid-up insurance nonforfeiture option.
Misstatement of age or sex provision Correct Ans-A life insurance policy provision that
describes the action the insurer will take to adjust the amount of the policy benefit in the event
that the age or sex of the insured is incorrectly stated.
Policy loan provision Correct Ans-A cash value life insurance policy provision that grants the
policyowner the right to take out a policy loan for an amount that does not exceed the policy's
cash value less one year's interest on the loan.
Nonforfeiture provision Correct Ans-A cash value life insurance policy provision that sets
forth the options available to the policyowner if the policy lapses or if the policyowner decides to
surrender or terminate the policy.
, Net cash surrender value Correct Ans-The amount the owner of a cash value life insurance
policy will receive upon surrendering the policy.
Automatic premium loan option Correct Ans-A cash value life insurance policy nonforfeiture
option under which the insurer will automatically pay an overdue premium for the policyowner
by making a loan against the policy's cash value as long as the cash value equals or exceeds the
amount of the premium due.
Extended term life insurance nonforfeiture option Correct Ans-A nonforfeiture option that
permiuts the owner of a cash value life insurance policy to discontinue premium payments and
use the policy's net cash surrender value as a net single premium to purchase term insurance for
the full coverage amount provided under the original policy for as long a term as the net cash
surrender value can provide.
Reduced paid up insurance nonforfeiture option Correct Ans-A nonforfeiture option that
permits the owner of a cash value life insurance policy to discontinue premium payments and use
the policy's net cash surrender value as a net single premium to purchase paid-up life insurance
of the same plan as the original policy.
Complete Solutions
Reinstatement provision Correct Ans-An individual life insurance provision that describes the
conditions the policyowner must meet to put the policy back into force after it has been
terminated because of nonpayment of renewal premiums or has been continued under the
extended term or reduced paid-up insurance nonforfeiture option.
Misstatement of age or sex provision Correct Ans-A life insurance policy provision that
describes the action the insurer will take to adjust the amount of the policy benefit in the event
that the age or sex of the insured is incorrectly stated.
Policy loan provision Correct Ans-A cash value life insurance policy provision that grants the
policyowner the right to take out a policy loan for an amount that does not exceed the policy's
cash value less one year's interest on the loan.
Nonforfeiture provision Correct Ans-A cash value life insurance policy provision that sets
forth the options available to the policyowner if the policy lapses or if the policyowner decides to
surrender or terminate the policy.
, Net cash surrender value Correct Ans-The amount the owner of a cash value life insurance
policy will receive upon surrendering the policy.
Automatic premium loan option Correct Ans-A cash value life insurance policy nonforfeiture
option under which the insurer will automatically pay an overdue premium for the policyowner
by making a loan against the policy's cash value as long as the cash value equals or exceeds the
amount of the premium due.
Extended term life insurance nonforfeiture option Correct Ans-A nonforfeiture option that
permiuts the owner of a cash value life insurance policy to discontinue premium payments and
use the policy's net cash surrender value as a net single premium to purchase term insurance for
the full coverage amount provided under the original policy for as long a term as the net cash
surrender value can provide.
Reduced paid up insurance nonforfeiture option Correct Ans-A nonforfeiture option that
permits the owner of a cash value life insurance policy to discontinue premium payments and use
the policy's net cash surrender value as a net single premium to purchase paid-up life insurance
of the same plan as the original policy.
