PA Life and Health Insurance Policy Provisions, Options, and Riders Test Questions and Correct Answers

What is the disadvantage of selecting the life income settlement option? If the beneficiary dies shortly after the payments begin, the balance of the principal will be forfeited What type of assignment is used to secure the payment of a debt with an existing life insurance policy Collateral Assignment An insurer has discovered a representaion on a life insurance policy application regarding the insured's age. The insured is 10 years older than he state on the application. What will the insurer do regarding the death benefit? Pay a reduced death benefit What are the dividend options in life insurance policies? Cash, Reduced Premium, Accumulation at Interest, Paid-up Additions, Paid-up Option, One-Year Terms, and Acceleration at Endowment What is consideration on the part of the insurer? A promise to pay policy benefits What nonforfeiture option provides coverage for the longest period of time? Reduced Paid-Up With the interest only settlement option, what happens to the policy's death benefit? Policy proceeds are retained by the insurance company; only the interest is paid to the beneficiary What life insurance policy provision prevents an insurer from disputing or denying a claim due to misstatements on the application after a certain period of time? Incontestability Who controls changes in premium payments, face values, and loans in a life insurance policy? Policyowner What nonforfeiture option is automatically selected by the company if not chosen by the policy owner? Extended Term the sole beneficiary of a life insurance policy dies before the insured. If the policy owner does not amend the beneficiary designation, what will happen to the policy's death benefit? paid out to the insured's estate