Chapter 3 Examfx Life and health
correctly answered graded A+
Is the beneficiary required to have insurable interest in the insured? - correct answer
✔✔Beneficiaries do not have insurable interest in the insured?
Which of the two types of policy assignments requires transfer of all ownership rights in the
policy to a third party? - correct answer ✔✔Absolute assignment
What term is used to describe methods of payment of the death benefit to the beneficiary upon
the insured death? - correct answer ✔✔Settlement options
What is the advantage of reinstating a life insurance policy as opposed to applying for a new
one? - correct answer ✔✔Policy premium in a reinstated policy will be set accordingly to the
insured's original age.
An applicant for life insurance misstated her age on the policy application. How will this affect
the death benefit? - correct answer ✔✔The death benefit will be adjusted to the amount that
the insured could obtain for her correct age.
What are the most common exclusions in life insurance policies? - correct answer ✔✔War and
military service, hazardous occupation, and aviation.
What provision allows the policy owner to reactivate a lapsed life insurance policy within a
specified period of time with proof of insurability? - correct answer ✔✔Reinstatement.
What dividend option is automatically selected by the company if not chosen by the
policyowner? - correct answer ✔✔Paid up additions
, When can an insurance company use suicide as a defense against paying a death claim? -
correct answer ✔✔when a suicide is committed within the first two years after the policy is
purchased.
What type of assignment is used to secure the payment of a debt with an existing life insurance
policy? - correct answer ✔✔Collateral assignment
What life insurance policy provision states that both the policy and a copy of the application
form the contract between the policyowner and the insurer? - correct answer ✔✔Entire
contract
Under what nonforfeiture option does the company pay the policy's surrender value and have
no further obligations to the policyowner? - correct answer ✔✔Cash surrender
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
What nonforfeiture option provides coverage for the longest period of time? - correct answer
✔✔Reduced paid up
What type of beneficiary is next in line after the primary beneficiary? - correct answer ✔✔The
contingent beneficiary
What are the dividend options in life insurance policies? - correct answer ✔✔Cash, reduced
premium, accumulation at interest, paid up additions, paid up option, one year term, and
acceleration of endowment
correctly answered graded A+
Is the beneficiary required to have insurable interest in the insured? - correct answer
✔✔Beneficiaries do not have insurable interest in the insured?
Which of the two types of policy assignments requires transfer of all ownership rights in the
policy to a third party? - correct answer ✔✔Absolute assignment
What term is used to describe methods of payment of the death benefit to the beneficiary upon
the insured death? - correct answer ✔✔Settlement options
What is the advantage of reinstating a life insurance policy as opposed to applying for a new
one? - correct answer ✔✔Policy premium in a reinstated policy will be set accordingly to the
insured's original age.
An applicant for life insurance misstated her age on the policy application. How will this affect
the death benefit? - correct answer ✔✔The death benefit will be adjusted to the amount that
the insured could obtain for her correct age.
What are the most common exclusions in life insurance policies? - correct answer ✔✔War and
military service, hazardous occupation, and aviation.
What provision allows the policy owner to reactivate a lapsed life insurance policy within a
specified period of time with proof of insurability? - correct answer ✔✔Reinstatement.
What dividend option is automatically selected by the company if not chosen by the
policyowner? - correct answer ✔✔Paid up additions
, When can an insurance company use suicide as a defense against paying a death claim? -
correct answer ✔✔when a suicide is committed within the first two years after the policy is
purchased.
What type of assignment is used to secure the payment of a debt with an existing life insurance
policy? - correct answer ✔✔Collateral assignment
What life insurance policy provision states that both the policy and a copy of the application
form the contract between the policyowner and the insurer? - correct answer ✔✔Entire
contract
Under what nonforfeiture option does the company pay the policy's surrender value and have
no further obligations to the policyowner? - correct answer ✔✔Cash surrender
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
What nonforfeiture option provides coverage for the longest period of time? - correct answer
✔✔Reduced paid up
What type of beneficiary is next in line after the primary beneficiary? - correct answer ✔✔The
contingent beneficiary
What are the dividend options in life insurance policies? - correct answer ✔✔Cash, reduced
premium, accumulation at interest, paid up additions, paid up option, one year term, and
acceleration of endowment
