Insurance MCQ

When the primary beneficiary predeceases the insured, the proceeds are paid to the: A Tertiary beneficiary B Alternate beneficiary C Contingent beneficiary D Collateral beneficiary Answer: C

The life insurance policy clause that prevents an insurance company from denying payment of a death claim after a specified period of time is known as the: A Misstatement of Age Clause B Incontestability Clause C Reinstatement Clause D Insuring Clause Answer: B

Life insurance policy dividends are considered to be: A A sharing of company profits with the stockholders B A return of a premium overcharge C A sharing of company profits with the policyholders D A guaranteed amount paid to reduce the cost of insurance Answer: B

If the insured understated his age and the error is discovered after the insured's death, the insurance company will: A Refuse to pay the death claim B Refund all past premiums paid with any accumulated interest C Pay the face amount of the policy with a deduction for the amount of the underpayment of premium D Pay the amount the premium would have purchased at the correct age Answer: D

A life insurance rider added to cover a child is usually what type of insurance: A Whole life B Level term C Decreasing term D Increasing term Answer: B

All are true about life insurance, EXCEPT: A An Automatic Premium Loan rider will keep a Whole Life policy from lapsing B Reinstatement of a lapsed policy is subject to certain conditions C The cash value of a Whole Life policy may be used to supplement retirement D The 1035 Exchange must always be with the same company that issued the first policy Answer: D

Which of the following beneficiary designations on a life insurance policy is "by class": A To both my children, Suzy and Scott equally B To my estate C To all my children D To my family trust Answer: C

Which statement about a typical Suicide Clause in a life insurance policy is true? A Suicide is excluded as long as the policy is in force B Suicide is excluded for a specific period of years and covered thereafter C Suicide is covered for a specific period of years and excluded thereafter D Suicide is covered as long as the policy is in force Answer: B

Which of the following riders is added to a policy written on the life of a child to make sure the premium is paid if the policyholder dies or becomes disabled: A Automatic premium loan B Extended term option C Payor benefit rider D Accelerated benefits rider Answer: C

All are true about the rider called Accidental Death Benefit, EXCEPT: A It has a lower cost per $1,000 than does life insurance B It pays double when the insured dies as a result of sickness C It requires death to occur within a certain period of time D It drops off the policy automatically at a certain age, causing the overall premium to decrease Answer: B

The owner of a business is insured under a $100,000 Key Employee Life policy that contains a Double Indemnity clause and a Suicide Clause. The business has paid the annual premium of $2,000. Six months after the inception date of the policy, the insured commits suicide. The insurance company will pay the beneficiary: A $200,000 B $100,000 C $2,000 D $0 Answer: C

All of the following are non-forfeiture options on a Whole Life insurance policy EXCEPT: A Cash surrender B Paid up additions C Extended term D Reduced paid up Answer: B

Which of the following statements about the Automatic Premium Loan provision in a life-insurance policy is true? A A loan taken under the provision is not interest-bearing B The provision must be elected by the policyholder C The provision applies only to Whole or Limited-Pay Life policies D The provision cannot be revoked by the policyholder Answer: B

Which of the following statements is true about a policy assignment: A It permits the beneficiary to designate the person or persons to receive the benefits B It is valid during the insured's lifetime only because the death benefit is payable to the named beneficiary C It transfers the owner's rights under the policy to the extent expressed in the assignment form D It is the same as a beneficiary designation Answer: C

If the insured's age was overstated at the time a life-insurance policy was purchased and the error is discovered on the death of the insured, the insurance company will: A Void the policy B Be prevented from taking any action according to the provisions of the Incontestability clause C Refund the overcharge in premiums to the beneficiary D Provide the additional insurance in the amount that has been purchased by the additional premium Answer: D

A client bought an annual renewable term policy with a face amount of $100,000 on June 1, 2009 for an annual premium of $200. If he died on June 20th, 2010 without paying his renewal premium when due, the insurer would pay: A Zero B $99,800 C $100,000 D $100,000 less any outstanding loans Answer: B

A revocable beneficiary: A Must give their consent before a loan may be taken B Must give their consent before cash surrender may be taken C Has no vested interest in the policy D May never be changed Answer: C

All are false about Automatic Premium Loan on a Life insurance policy EXCEPT: A It is a non-forfeiture provision B It pays premiums due at the end of the grace period C It is a rider requiring the payment of an additional premium D It is attached to all Whole Life and Term Life policies Answer: B

Most assignments of life-insurance policies are made in order to protect the: A Insured's insurability B Insured's personal or business credit C Beneficiary from the claims of creditors D Insurance company from fraudulent claims Answer: B

The insuring agreement or clause in a Life insurance policy contains all of the following EXCEPT: A The name of the insurer B The name of the insured C The coverages D How to change the beneficiary Answer: D