Financial Modeling & Valuation Analyst (FMVA), Commercial Banking & Credit Analyst (CBCA), Capital Markets & Securities Analyst (CMSA), Certified Business Intelligence & Data Analyst (BIDA), Financial Planning & Wealth Management (FPWM). B owns a Whole Life policy with a guaranteed insurability option that allows him to purchase, without evidence of insurability, stated amounts of, additional Whole Life coverage at specified times. D) nonforfeiture provision, A whole life insurance policy accumulates cash value that becomes, A) the policy loan value which the insured may borrow against B) Free-look period \text { Accounts Receivable } & 15,900 & \\ C) all remaining cash values are paid to the policyowner How is a life insurance policy dividend legally defined? When the insured dies or at the policys maturity date, whichever happens first, The provision that can be used to put an insurance policy back in force after it has lapsed due to nonpayment is called, All of these statements about the Waiver of Premium provision are correct EXCEPT C) waiting period Which of these is considered to be a Living Benefit option in a life insurance policy? Only the beneficiary may select, In a Life insurance contract, an insurance companys promise to pay stated benefits is called the. What does the guaranteed insurability option allow an insured to do? In order to convert the engine type (diesel or gasoline) to a qualitative variable, first add a variable. B) Before payment of the benefit is made, specific conditions must exist, such as suffering from a terminal illness Which of the following statements is (are) true regarding life insurance policyholder dividends? D) $4,000 How are acts of war and aviation treated under a group life insurance policy? 9 Q What kind of policy does NOT typically require proof of insurability? Cash surrender value is the accumulated portion of a permanent life insurance policy's cash value that is available to the policyholder upon surrender of the policy. D) war. C) Cash value is surrendered to policyowner Salaries and Wages Payable. \text { Accumulated Dcprcciation } & & \$ 104,000 \\ A) Accumulation at Interest Option B) Entire Contract clause D) irrevocable assignment. What does the insuring agreement in a Life insurance contract establish? Which of these arrangements allows one to bypass insurable interest laws? B) Waiver of premium How much do I qualify to borrow? All of the following are considered to be nonforfeiture options available to a policyowner EXCEPT Options a) Extended Term Insurance b) Cash Surrender c) Reducation of Premium d) Reduced Paid-Up Insurance Answer: c) Reduction of Premium D) Family income rider. Which of the following is CORRECT regarding the death benefit amount? A) Reinstatement The common disaster provision states the insurer will continue as if, A) the insured outlived the beneficiary B) the beneficiary outlived the insured Which of the following is the process of getting oxygen from the environment to the tissues of the body? Also, the amount of reduced paid-up or extended-term insurance may decrease if a policys sub-account performance is poor or credited interest rates are low. pilot of personal airplane. 90 percent of forfeiture proceeds go to law enforcement, Law enforcement required to report forfeitures to the state auditor on a monthly basis, and the auditor must then make annual reports to the state Legislature. A person may have a vested interest in property to be forfeit in two ways: In personum jurisdiction and in rem jurisdiction. A) Martial status $100,000, L takes out a life insurance policy and dies 10 years later. She can reestablish coverage under which of the following provisions? D) grace period. Cash Value vs. The agreement in a life insurance contract that states a specific sum of money will be paid to a designated person upon an insureds death is called a(n), Which of these is NOT considered to be a right given to a policyowner? B) provide evidence of insurability, pay past due premiums B) unemployed How much will the insurer pay the beneficiary? reduced paid-up insurance cash value. D) Full face amount. Annuities pay regular payments as outlined in the contract. The policyowner wants to make sure that upon his death, the life policy will pay a portion of the proceeds annually to his spouse, but that the principal will be paid to their children when they reach a certain . Depending on the age of the policy, the cash surrender value could be less than theactual cash value. A) 12/15th of the policys face amount C) no beneficiary was ever named Coverage can be added at specific ages, Evidence of insurability is required when the option is exercised. P purchases a $50,000 whole life insurance policy in 2005. S dies 1 year later of natural causes. P is the insured on a participating life policy. C) Nonforfeiture provision D) Leave, A life insurance rider that allows an individual to purchase insurance as they grow older, regardless of insurability, is called a(n), A) guaranteed term rider \text { Unearned Service Revenue } & & 11,200 \\ See the bus stats for the Lincolnville School District. The term policy ends after a fixed number of years as detailed in the policys nonforfeiture table. D) Provision. A nonforfeiture clause is an insurance policy clause that is included in standard life insurance and long-term care insurance. Which provision would keep the policy in force if S does not make the required payment and the policy has adequate cash value from which the premium payment can be made? If thats the case, you dont have to worry anymore. Paid-up Additions A) Insuring clause B) the death benefit a) Modified life b) Variable life c) Ordinary life d) Graded premium whole life. While investigating the claim, the insurer discovered material misrepresentations made by P during the application process. D) A loan can be taken out for up to the face amount of the policy, A) Net death benefit will be reduced if the loan is not repaid, Life insurance policies will normally pay for losses arising from, A) commercial aviation Accounting Cycle and Classifying Accounts, Adjusting Accounts for Financial Statements, Asset Demand and Supply under Uncertainty, Business Analytics & Technology Management Chapter 2, Business Analytics & Technology Management Chapter 3, Business Analytics & Technology Management Chapter 4, Business Analytics & Technology Management Chapter 5, Business Analytics & Technology Management Chapter 6, Capital Budgeting and Managerial Decisions, Derivative Instruments and Hedging Activities, External Financial Statements and Revenue Recognition, Financial Intermediaries and Financial Markets, Financial Markets and Securities Offerings, Financial Statements and Accounting Transactions, Integrated Marketing Communications and Direct Marketing, Interactive Marketing and Electronic Commerce, Interpersonal and Organizational Communication, Introduction to Human Resource Management, Introduction to Human Resources Assessment, Managerial Accounting Concepts and Principles, Market Segmentation Targeting and Positioning, Organization and Operation of Corporations, Organizational Markets and Buyer Behaviour, Profitability Analysis and Analytical Issues, Profitability Analysis and Decentralization, Reporting and Analyzing Long Lived Assets, Responsibility Accounting and Performance Measures, Understanding Interest Rates Determinants. The extended-term insurance also helps the policy owner to quit paying premiums for the original policy, but retain the equity accumulated in the policy. B) Dividend option Required fields are marked *, All of the following are considered to be nonforfeiture options available to a policyowner EXCEPT. c. What is your commission? An insurance contract must contain all of the following to be considered legally binding EXCEPT a) Consideration b) Competent parties c) Beneficiary's consent d) Offer and Acceptance. You should now have gotten the answer to your question All of the following are nonforfeiture options, EXCEPT:, which was part of Insurance MCQs & Answers. Reduced Paid-up In permanent life insurance, the policyholder will not lose the life insurance policy entirely. Which type of beneficiary is changeable at any point? ? In 2010, P takes up scuba diving and dies in a scuba-related accident in 2011. A sub-agent cannot take or sign an application. B) Exclusion A waiver of premium rider allows an insured to waive premium payments if the insured is Life Insurance Policies - Provisions, Options, Fundamentals of Financial Management, Concise Edition, Ch 3 Section 3: L'chec scolaire: les lves. Joanne has a $100,000 whole life policy with an accumulated $25,000 of cash value. The meaning of NONFORFEITURE is failure or refusal to forfeit something often used before another noun. a) Both irrevocable and Revocable. \text { Interest Expense } & \underline{~~~~~~~~~~4,500} &\underline{~~~~~~~~~~~~~~~~~~~} \\ All of the following are Nonforfeiture options EXCEPT a) Reduced paid-up b) Interest only c) Cash surrender d) Extended term. Some states require a provision limiting the time parameters in which a claimant may seek recovery from an insurer under a policy. Which situation accurately describes a reduced paid-up nonforfeiture option? How are policyowner dividends treated in regards to income tax? She has been working in the financial planning industry for over 20 years and spends her days helping her clients gain clarity, confidence, and control over their financial lives. B) waiver of premium D) supplement. Set the qualitative variable to 0 if the engine type is a diesel. Cash surrender value b. Marguerita is a Certified Financial Planner (CFP), Chartered Retirement Planning Counselor (CRPC), Retirement Income Certified Professional (RICP), and a Chartered Socially Responsible Investing Counselor (CSRIC). Which of the following statements is true? What does the ownership clause in a life insurance policy state? D) a source of funding a term rider to the policy, A) the policy loan value which the insured may borrow against. The cash surrender value will also be reduced by any outstanding loan amount. S buys a $50,000 whole life policy with a $50,000 Accidental Death and Dismemberment rider. A) Accelerated death benefit rider The following are the payout options outlined in the nonforfeiture clause of a whole life insurance policy: If a policy owner chooses the cash surrender value option, the insurer will pay the remaining cash value within six months. D is the policyowner and insured for a $50,000 life insurance policy. Life Income. There are no guarantees for the minimum amount of life insurance available in variable and universal life policies, which allow for variable investing. C) minus indebtedness and without interest With the cash surrender value option, the policy owner terminates the policy and receives the remaining cash value within six months. Eric purchased a cash value life insurance policy six years ago. In the early years of a policy, life insurance companies can deduct fees upon cash surrender. Accumulation at Interest ", "Standard nonforfeiture law for life insurance.". C) The policys premiums will increase after 20 years b. Past due premiums are waived All of the following are optional methods of settlement after the insured has died EXCEPT. All of the following are optional methods of settlement after the insured has died EXCEPT life income option. A nonforfeiture clause is an insurance policy clause stipulating that an insured party can receive full or partial benefits or a partial refund of premiums after a lapse due to nonpayment.. Unpaid interest will be added to your loan amount and will be subject to compounding. D) is injured in a skiing accident and dies 18 months later. B) Waiver of premium rider C) resubmit a new life insurance application C) Insuring clause A) The policy may be paid up early by using accumulated cash values Each takes out a $500,000 life insurance policy on the other, naming himself as primary beneficiary. Which provision prevents an insurer from changing the terms of the contract with the policyowner by referring to documents not found within the policy itself? C) suicide C) completely and permanently disabled How Cash Value Builds in a Life Insurance Policy, Payout Options Under a Nonforfeiture Clause, Paid-Up Additional Insurance: Definition and the Role of Dividends, Life Insurance: What It Is, How It Works, and How To Buy a Policy, Whole Life Insurance Definition: How It Works, With Examples, Policy Loan: Definition, How They Work, Benefits, and Downsides. e. Equipment. B) Policy loans D) The benefit can be offered as a rider at a specific extra cost or may be at no cost, D) The benefit can be offered as a rider at a specific extra cost or may be at no cost. She would like to borrow $15,000 against the cash value. \text { Rent Expense } & 229,000 & \\ C) Annuity rider Adam received his master's in economics from The New School for Social Research and his Ph.D. from the University of Wisconsin-Madison in sociology. One of the questions on the application asks if P engages in scuba diving, to which P answers "No". C) A prorated death benefit based on the amount of insurance the insureds premiums would have been if purchased at the correct age B) Make a premium payment after the due date without any loss of coverage It is taxed as ordinary income. Such an option considers the saving component of the policy. J let her life insurance policy lapse 8 months ago due to nonpayment. fare-paying passenger. A) Waiver All of the following statements are true EXCEPT, A) Mikes policy will develop no cash value over the policys term At year end, you have the following data for adjustments: a. This provision is called a(n). B) aviation B) policy and all sales material C) reduction in policy premium Interest only is a settlement option. D) experiencing financial hardship. What is an insurance policys grace period? It stipulates that a policy owner will receive partial or full benefits or a refund of premium paid towards a whole life insurance policy if the policy lapses due to non-payment. C) Incontestability One type of life insurance is a nonparticipating whole life policy in which cash values are based on the insurer's present mortality, investment, and expense experience. safeguard the insurer from an applicant who is contemplating suicide, A provision in a life insurance policy that pays the policyowner an amount that does not surpass the guaranteed cash value is called the. d) The PPO will pay reduced benefits. Your email address will not be published. She is concerned, however, that if she becomes disabled she will be unable to pay the premiums as they come due. D) provide a valid reason for the lapse, B) provide evidence of insurability to the insurer. Surrender Value: What's the Difference? D) Nonforfeiture clause. Which dividend option would an insurer invest the policyowner's money and add any interest earnings as the dividends accrue? What action can a policyowner take if an application for a bank loan requires collateral? C) Reduction of Premium c) Beneficiary's consent The four essential elements of all legal contracts are offer and acceptance, consideration, competent parties, and legal purpose. James is the insured on a life insurance policy where his age was misstated on the application. Which of these provisions require proof of insurability after a policy has lapsed? D) Make a policy loan interest payment after the due date without any loss of coverage, B) Make a premium payment after the due date without any loss of coverage. He forgot to pay the premium that was due last week. B) Decreases the policys cash value When the owner of whole-life insurance policy surrenders thepolicy, they have several nonforfeiture options. A) Bank loans Irrevocable beneficiaries must give permission to the policyowner in order for the beneficiary to be changed. The automatic premium loan provision is designed to, All of these statements concerning Settlement Options are true EXCEPT d) Revocable Revocable beneficiares can be changed at any point. CFI is the official provider of the global Commercial Banking & Credit Analyst (CBCA) certification program, designed to help anyone become a world-class financial analyst. When a misrepresentation on a life insurance policy application is discovered, what action may an insurance company take? D) policy and attached application, Ownership of a life insurance policy may be temporarily transferred with a(n), A) collateral assignment Which of these is NOT a characteristic of the Accelerated Death Benefit option? The correct answer is "Automatic Premium Loan Option". B) Paid-up additions Which of these is NOT considered to be a common life insurance nonforfeiture option? Surrendering the policys cash value A) $400 B) $800 C) $2,000 D) $4,000. C) One-year term B) The insurers obligation to return all premiums upon an approved death claim The nonforfeiture benefits clause allows the owner to choose full benefits or partial benefits when the premium can no longer be paid starting after a certain number of years. The option allows the policyholder to retain the death benefit without being required to make additional future premium payments. Which statement is correct regarding the premium payment schedule for whole life policies? C) waiver of premium M had an annual life insurance premium payment due January 1. B) No interest will be charged on loan balance Which of these require an offer, acceptance, and consideration?
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