A D Banker Property and Casualty Chapter 6 with correct answers

Insurance agreement in life insurance policy states what? - ANSWERSObligation of the insurance company to pay the policy proceeds upon presentation of valid proof of the death of the insured which occurred while the policy is in force When a life insurance becomes incontestable - ANSWERSafter 2 yrs, the insurer will not refuse to pay a death claim based on misinformation in the original app for insurance Grace period in life insurance policy is 31 days, which allows - ANSWERSpayment of the premium after the due date w/out a penalty or lapse in coverage Advantage to the policyowner in the reinstatement of a life insurance policy - ANSWERSpolicyowner continues to enjoy the benefits that were provided in the original policy, including the original premium policy loan provisions include - ANSWERSinterest is charged annually unpaid interest is added to the value of the loan outstanding loans will be deducted from the face amt at the time of claim contingent beneficiary has the right to - ANSWERSthe policy proceeds only when there is no primary beneficary Why "class" designations of beneficiaries may be a problem - ANSWERSthey are vague descriptions of beneficiaries that could result in a court having to decide which person will or will not receive the policy proceeds Spendthrift law of each state protect the life insurance proceeds against claims of what - ANSWERScreditors of the insured & or beneficairy Settlement options - ANSWERSInterest only, life income w/ period certain, lump sum life income only Dividend options include - ANSWERSrefund in cash, reduce premium due paid=up additional insurance Insuring clause is the insurers - ANSWERSpromise to pay the benefits of contract in the event of death of insured while policy in force, on front page Consideration clause - ANSWERSspecifies the amount & frequency of premium payment the owner must pay Misstatement of age or gender is exempt from - ANSWERSincontestability provision Absolute assignment is - ANSWERSPermanent assignment....owner may assign ownership to any person after telling insurance company Collateral assignment is - ANSWERSTemporary assignment...owner may offer a portion or all of policy proceeds to a 3rd party as collerateral for debt Suicide provision states that suicide w/in the first - ANSWERS2 yrs avoids the payment of death benefit....insurance company will return 100% premiums paid to beneficiary 4 most common exlusions found in life insurance policies - ANSWERSWASH.... War Aviation Status If beneficiary named as irrevocable, it may not - ANSWERSbe changed w/out consent of the beneficiary since the irrevocable beneficiary has a "Vested interest" in the proceeds Contingent beneficiary is a - ANSWERSsecondary beneficiary & normally wont receive any proceeds if the primary has survived the the insured Common disaster provision deals with - ANSWERSsituation in which the insured & primary beneficiary both died at same accident, (Known that the insured died first, the primary beneficiary must outlive the insured by a number of days Spendthrift laws protect the - ANSWERSpolicy proceeds for a named beneficiary by preventing creditors of the deceased from claiming the portions Lump sum settlement option is the - ANSWERSmost common the beneficiary receives the full death benefit as a single, tax- free payment Interest only option provides - ANSWERSthe beneficiary w/ periodic payments of taxable interest only unpaid policy proceeds income tax-free at any time Life income only option pays - ANSWERSthe largest periodic amt to beneficiary, w/ no continuing periodic payments following death Nonforfeiture options are associated only with - ANSWERSa policys cash value during the lifetime of the insured 3 nonforfeiture options: - ANSWERScash value reduced paid-up insurance extended term insurance cash surrender value allows the policyowner - ANSWERSto terminate policy at any time & receive the avaiable value as a lump sum distribution Reduced-paid up insurance - ANSWERSconverts cash surrender value to a reduced face amt single premium whole life policy at insureds attained age Will endow for full face amt at age 100 Extended term insurance provides - ANSWERSthe same death benefit as the original policy, but only for as long a period of time as cash value will purchase at insureds attained ag Dividend options only found in - ANSWERSparticipating policies For income tax purposes insurance policy dividends are considered - ANSWERSa refund of excess premium payments & are not taxable until all of premiums paid have been recovered Common dividend options include - ANSWERScash refund, purchase paid-up additions purchase 1 yr term insurance pay current premiums accumulate at interest