Reading...
Play button
Play button
Use LEFT and RIGHT arrow keys to navigate between flashcards;
Use UP and DOWN arrow keys to flip the card;
H to show hint;
A reads text to speech;
7 Cards in this Set
- Front
- Back
|
2. Which of the following statements concerning the beneficiary provisions in a life insurance policy is correct?
|
(D) The contingent beneficiary will receive policy proceeds only if the primary beneficiary predeceases the insured.
The answer is (D). (A) is incorrect because one or more people or entities may be named as either primary or contingent beneficiaries. (B) is incorrect because the contingent beneficiary receives nothing and all proceeds go the primary beneficiary when the insured dies, unless the primary beneficiary predeceases the insured or loses entitlement to the benefits for some other reason. (C) is incorrect because transfer taxes may be incurred when the estate is the beneficiary. |
|
|
21. Which of the following statements is correct if the life income settlement option in a cash value life insurance policy is exercised?
|
C) The policy's death proceeds will be used to purchase a single-premium annuity for the beneficiary.
The answer is (C). (A) is incorrect because settlement options are exercised when the insured dies. (B) is incorrect because the settlement option is a way of distributing the benefit, not of modifying its value. (D) is incorrect because settlement options are exercised after the insured dies, at which time no more premiums are payable. |
|
|
40. Which of the following statements concerning a fixed-premium life insurance policy grace period is (are) correct?
I. It grants the policyowner an additional period of time to pay a premium after it is due. II. Its standard length is 90 days. |
(A) I only
The answer is (A). II is incorrect because the standard length of a grace period is 30 or 31 days in fixed-premium policies. |
|
|
65. Astronomical Insurance Company accidentally issued a life insurance policy that had not been approved in Texas to a Texas man who wished to insure his life. Which of the following statements concerning this policy is (are) correct? I. The policy is voidable at the option of the policyowner. II. The insured's beneficiary will be unable to collect benefits if the mistake is discovered after the insured's death.
|
(A) I only
The answer is (A). II is incorrect because the beneficiary will be permitted to enforce the policy as though it complied with Texas law. |
|
|
71. All the following statements concerning the nonforfeiture options in life insurance are correct EXCEPT
|
(B) The reduced paid-up option generally provides the same amount of death protection as the original policy, but for a reduced period of time.
The answer is (B). The reduced paid-up option produces a reduced death benefit for the life of the insured. |
|
|
74. All the following statements concerning life insurance dividend options are correct EXCEPT
|
(D) With the paid-up additions option, dividends will be used to pay up the policy prior to age 65.
The answer is (D). With paid-up additions, each dividend is used to purchase fully paid-up whole life insurance. |
|
|
94. All the following statements concerning life insurance policy loans are correct EXCEPT
|
(B) The policyowner is required to repay a policy loan before being permitted to surrender the policy for its cash value, make a withdrawal from the cash value, or take another policy loan.
The answer is (B). The policyowner is not required to repay a policy loan. |
