Depending on the age of the policy, the cash surrender value could be less than theactual cash value. Coverage will be adjusted to reflect the insureds true age if a misstatement of age is discovered. Waiver of Premium is available on both permanent and term insurance policies Which dividend option would an insurer invest the policyowners money and add any interest earnings as the dividends accrue? C) Insuring clause D) Monthly income payments. 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The policy starts generating returns by the third year, and part of the revenue goes to policy reserve, while the remaining revenue goes to cover administrative costs, agent commissions, and acquisition costs. In order to project a classy image, an expensive seafood restaurant requires that its servers wear tuxedos . \text { Prepaid Rent } & 9,500 & \\ d) Reduced Paid-Up Insurance. C) Reinstatement period Under which nonforfeiture option will permanent life insurance coverage be in force after the nonforfeiture option is exercised? A) It allows for a spouse to be added as a rider to a life insurance policy Besides his extensive derivative trading expertise, Adam is an expert in economics and behavioral finance. An analysis indicates that prepaid rent on December 31 should be $2,300. b) The key employee has premiums deducted from his salary. A) Net death benefit will be reduced if the loan is not repaid g. Salaries and Wages Expense C) suicide Which statement is true if Ps premiums are waived due to a disability? (i.e., paid-up policy), Buy an extended-term insurance policy with the remaining cash surrender value (no further premiums required), Use your accumulated cash value to pay the future premiums (also referred to as an automatic premium loan). C) Ike will have a level premium Which situation accurately describes a reduced paid-up nonforfeiture option? If a policy owner has continually made premium payments for a sufficient amount of time, a forfeiture clause might become active in one of two ways. The remaining cash value may be used to purchase an annuity free of commissions or expenses. B) payor provision However, during the early years of awhole life insurance policy, the savings portion brings little return compared to thepremiumspaid. C) A return of excess premium and not taxable This provision is the, All of the following are nonforfeiture options EXCEPT. D) policy and attached application, Ownership of a life insurance policy may be temporarily transferred with a(n), A) collateral assignment A) Cash surrender 40% taxable, similar to a capital gain B. C) resubmit a new life insurance application from October 1 to December 31 is unpaid and unrecorded. Correct answer: (D) Sheila would like to purchase a cash value life insurance policy. 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? C) aviation B) Pay age-corrected benefits How much do I qualify to borrow? type of life insurance D) Certificate of Authority, All of these are valid policy dividend options for a life insurance policyowner EXCEPT, A) cash outlay to the policyowner How much will the insurer pay? A) Insured becomes unemployed What will the insurer pay to Ps beneficiary? This value is payable before death. Diffusion Let us complete them for you. C) Covered hazard Which of these are NOT an example of a Nonforfeiture option? Fixed Period The above question All of the following are considered to be nonforfeiture options available to a policyowner EXCEPT, Was part of Insurance MCQs & Answers. A) The face amount and policy premium are not affected by the payment Past-due interest payments not paid after 3 months will void the policy Ss attained age b. She would like to borrow $15,000 against the cash value. The option allows the policyholder to retain the death benefit without being required to make additional future premium payments. B) the death benefit List of Excel Shortcuts Which military service exclusion clause would pay upon his death? While investigating the claim, the insurer discovered material misrepresentations made by P during the application process. Indicate whether each of the following items is a real or nominal account and whether it appears in the balance sheet or the income statement. C) reduction in policy premium This provision is usually provided with an increase in premium f. Six months interest at 8% on the note was paid on September 30. Which of the following statements is (are) true regarding life insurance policyholder dividends? B) Entire Contract clause C) Entire Contract \text { Other Assets } & 60,900 & \\ C) Waivers Which of the following statements is true? c) Beneficiary's consent The four essential elements of all legal contracts are offer and acceptance, consideration, competent parties, and legal purpose. How much will the insurer pay the beneficiary? Policy loans may still be made A) Waiver Why would you not want to prepare financial statements D) grace period. Learn how policy loans work and about their risks. B) The policy may be paid up early by using policy dividends e. Equipment. In some instances, insurers provide an extended-term option as an automatic option in the event that the original coverage lapses due to missed premium payments. C) waiver of premium the benefit can be offered as a rider at a specific extra cost or may be at no cost. The death benefit would be equal to the benefit in the original whole life insurance policy. Her doctor said that her only chance of survival is an experimental treatment. d) 6 months Pre-existing conditions must be covered after a policy has been in force for 6 months. Past due premiums are waived C) Extended term insurance D) $4,000 A policy loan is issued by an insurance company and uses the cash value of a life insurance policy as collateral. T took out a $50,000 life insurance policy with an Accidental Death and Dismemberment rider. D) Decreasing term insurance, A provision that allows a policyowner to withdraw a policys cash value interest free is a(n), A) partial surrender Must have a terminal illness to qualify. B) The insurer withholds the cost basis Which of these provisions require proof of insurability after a policy has lapsed? the death benefit paid will be what the premium would have purchased at the correct age. A) Optional rider B) provide evidence of insurability to the insurer 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 non-payment. Feel free to get in touch with us via email. Have a great time ahead. B) automatic premium loan M had an annual life insurance premium payment due January 1. D) Accumulation at interest. b) Cash Surrender The amount of cash value you will have built-in your policy will be reduced by the amount of any loans against your life insurance. C) accelerated benefit rider D) interest-only option. Which nonforfeiture option has the highest amount of insurance protection? A) Cash surrender B) Make a premium payment after the due date without any loss of coverage The goal of a life insurance policy is to protect the surviving dependents of the policyholder such that, after the death of the insured person, the insurance company pays a specific sum to the named beneficiaries. For traditional whole-life policies, the owner decides which of four ways (see below) they would like to access the policys cash value. B) nonforfeiture option o paid - up additions extended term insurance . Extended Term Reduced Paid-up Cash Surrender Life Income. 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). D) Payor benefit. Which of these actions is taken when a policyowner uses a Life Insurance policy as collateral for a bank loan? The insured partys coverage can be terminated automatically when the policyholder fails to make premium payments or when he/she surrenders the policy. D) war. 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? S has a Whole Life policy with a premium payment due soon. B) The insurers obligation to return all premiums upon an approved death claim If an insured dies because of an accident, which type of life insurance rider will provide additional coverage? If the consumer price index has gone up 4%, how much may Ron increase the face value of the policy? See the bus stats for the Lincolnville School District. C) pay past due premiums, agree to new incontestable period It is taxed as ordinary income. All of the following are standard life insurance policy nonforfeiture options EXCEPT: (A) cash surrender option(B) 1-year term insurance option(C) extended term insurance option(D) reduced paid-up (permanent) insurance option A (B) 1-year term insurance option 6 Q Which of the following statements best describes life insurance policy dividends? 1. What are collateral assignments normally associated with? B) Buyers Guide B) The policy will be voided with no death benefits paid A) Declarations Which of these would be considered a Limited-Pay Life policy? 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.. D) Accelerated death benefit, Barbaras policy includes a rider which allows her to purchase additional insurance at specific dates or events without evidence of insurability. Which of the following is the process of getting oxygen from the environment to the tissues of the body? The interest earned on policy dividends is A. Who does the sub-agent represent? Depending on the age of the policy, the cash surrender value could be less than theactual cash value. The length of time when the new policy will be in force will depend on the cash values available from the original policy and the age of the insured party at the time the person chooses the extended-term option. C) Paid-Up Additions Option D) Settlement options. 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. Forfeiture is broadly defined as the loss of property for failing to obey the law, and that property is generally lost to the state. Consider consulting a financial advisor who can guide you on choosing an option that will best fit your circumstances. Each takes out a $500,000 life insurance policy on the other, naming himself as primary beneficiary. Which of the following statements is true? Cookies collect information about your preferences and your devices and are used to make the site work as you expect it to, to understand how you interact with the site, and to show advertisements that are targeted to your interests. Which type of rider will waive the premium on a childs life insurance policy if the parent paying the premium dies? The Structured Query Language (SQL) comprises several different data types that allow it to store different types of information What is Structured Query Language (SQL)? Standard life insurance and long-term care insurance may have nonforfeiture clauses. Which of these is NOT a valid policy dividend option? A life insurance policy which ensures that the premium will be paid if the insured becomes disabled has what kind of rider attached? D) the protection ends. D) Cash surrender. We also reference original research from other reputable publishers where appropriate. This rider is called a(n), A) Guaranteed insurability rider D) provide a valid reason for the lapse, B) provide evidence of insurability to the insurer. A sub-agent cannot take or sign an application. When a life insurance policy is surrendered, how does the cost recovery rule apply? How much will Ds beneficiarys receive? \text { Note Payable (due 2022) } & & 50,000 \\ D) Allows the insured to convert a term life policy to whole life with no evidence of insurability, B) Purchase additional coverage with no evidence of insurability required, Loans obtained by a policyowner against the cash value of a life insurance policy, A) are treated as taxable income Are you having trouble answering the question All of the following are nonforfeiture options, EXCEPT:? Cash surrender value applies to the savings element of whole life insurance policies payable before death. C) the source of funding for administration fees Insurance companies can charge an interest rate based on the policyowners credit report, Past-due interest on a policy loan is added to the total debt. The insurance company charges a surrender fee to the policy owner to cover expenses incurred in recording the policy in the companys books and any administrative expenses incurred. a) Conversion b) Decreasing Term c) Reduced Paid-up d) Extended Term. Nonforfeiture values give the insured the right to the cash value even if the policy lapses or is surrendered. c) Reducation of Premium A) Bank loans Assignment of ownership a) The company b) The insured c) The agent d) The counselor. What is the name of the provision which states that a copy of the application must be attached to the policy when issued? 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. One of the questions on the application asks if P engages in scuba diving, to which P answers "No". A) Policy Summary C) Cash value is surrendered to policyowner 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. Waiver of Premium C) dies instantly from a car accident B) Waiver of premium rider ? The reduced life insurance coverage is calculated based on the insureds attained age, cash surrender value, and the number of premiums paid by the policy owner. Which rider provides coverage for a child under a parents life insurance policy? The term policy ends after a fixed number of years as detailed in the policys nonforfeiture table. Which of the following provisions guarantees that premiums will be waived if a Juvenile Life policyowner becomes disabled? "What Are Life Insurance Non-Forfeiture Options? Some states require a provision limiting the time parameters in which a claimant may seek recovery from an insurer under a policy. B) Changes in the insuring clause You are eligible for the reduced "paid up" contingent nonforfeiture benefit when all three conditions shown below are met: The premium you are required to pay after the increase exceeds your original premium by the same percentage or more shown in the chart below; Triggers for a Substantial Premium Increase Issue Age Under 65 65-80 Over 80 What kind of rider did S include on the policy? b) Variable life Because variable life policies invest in the insurer's separate accounts and allow the policyowner to choose specific investment strategies, the interest rates will fluctuate depending upon the performance of the investments. Only the beneficiary may select, In a Life insurance contract, an insurance companys promise to pay stated benefits is called the. P is the insured on a participating life policy. Some companies offer an annuity option in the nonforfeiture clause. The rest are all possible exclusions. C) Rider B) the policy would be payable only after the beneficiary makes past due premium payment All of the following are Nonforfeiture options EXCEPT a Reduced paid-up b Interest only c Cash surrender d Extended term 6: Which of the following is guaranteed to the policyowner through nonforfeiture values? Which of the following statements is TRUE? \textbf{December 31, 2019} However, when the policy is terminated or the owner surrenders the policy, the death benefit ceases to exist. Which of the following is NOT a common life insurance policy rider? c) The business is the owner and beneficiary of the policy. Extended Term computer. At year end, you have the following data for adjustments: a. C) $2,000 What Is Charitable Gift of Life Insurance? 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 . h. Supplies. D) experiencing financial hardship. What will the beneficiary receive if the insured dies during this Grace Period? D) Grace period. C) Reduced paid-up insurance B) Application C) Pay full benefits as stated in the policy A) Proof of insurability B) One year term Eric purchased a cash value life insurance policy six years ago. An insured is past due on his life insurance premium, but is still within the Grace Period. C) accident What does the grace period allow a life insurance policyowner to do? B) select a beneficiary These include white papers, government data, original reporting, and interviews with industry experts. Such an option considers the saving component of the policy. Change the beneficiary, if revocable, Modify a provision in the insurance contract. Set the qualitative variable to 0 if the engine type is a diesel. A) Reduction of premium What provision can Sheila add to her policy to address this concern? cash (lump sum). RogersCoprorationUnadjustedTrialBalanceDecember31,2019, AccountDebitCreditCash$3,100AccountsReceivable15,900Supplies4,200PrepaidRent9,500Equipment625,000AccumulatedDcprcciation$104,000OtherAssets60,900AccountsPayable9,400UnearnedServiceRevenue11,200NotePayable(due2022)50,000CommonStock279,500RetainedEarnings,12/31/201837,000ServiceRevenue598,000WagesExpense137,000RentExpense229,000InterestExpense4,500Totals$1,089,100$1,089,100\begin{array}{lrr} B) the right to contest the terms of the policy B) Insured becomes totally disabled suicide. The correct answer is "Automatic Premium Loan Option". The automatic premium loan provision is designed to, All of these statements concerning Settlement Options are true EXCEPT \text { Common Stock } & & 279,500 \\ 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 $50,000 minus any outstanding policy loans. Reduced paid-up insurance c. Accumulate at interest d. Extended term Answer: c. Accumulate at interest 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. \text { Interest Expense } & \underline{~~~~~~~~~~4,500} &\underline{~~~~~~~~~~~~~~~~~~~} \\ 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). S would like to use dividends from her life insurance policy to purchase paid-up additions. Sometimes, a policy expires after a so-called grace period. D) A return of excess premium subject to capital gains tax, C) A return of excess premium and not taxable, All of the following riders can increase the death benefit amount EXCEPT, A) Cost of Living With the cash surrender value option, the policy owner terminates the policy and receives the remaining cash value within six months. 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. A policy loan is made possible by which of these life insurance policy features? Recent Examples on the Web This relatively unknown nonforfeiture option is called a life settlement. C) Insured has had policy in force for a specified number of years Or if you were 35 when you purchased your policy and you paid until you were 45, you would receive a term policy less than 10 years. B) Dividend options A Its premium steadily decreases over time, in response to its growing cash value. E and F are business partners. Whole Life Insurance: Whats the Difference? Which policy provision is responsible for this? Which of these is NOT a characteristic of the Accelerated Death Benefit option? 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. d) The key employee is the insured. \textbf{Rogers Coproration}\\ A) Entire contract period Which of these life insurance riders allows the applicant to have excess coverage? Eric purchased a cash value life insurance policy six years ago. This provision is called a(n). D) Guaranteed Insurability, The suicide clause of a life insurance policy states that if an insured commits suicide within a stated period from the policys inception, the insurer will only be liable for a return of premiums paid, A) minus indebtedness and with interest What is an insurer required to do when faced with an error made under the Misstatement of Age provision? Partially tax deductible depending on the income level. B) Dividend option automatically add the amount of interest due to the loan balance. d) Revocable Revocable beneficiares can be changed at any point. Insurers require policyholders to have paid at least three years of premiums before they can be eligible for paid-up insurance. In permanent life insurance policies, if you fail to pay the premiums in the grace period, you won't lose your life insurance. Which life insurance rider typically appears on a Juvenile life insurance policy? D was actively serving in the Marines when he was killed in an automobile accident while on leave. Full coverage continues D) supplement. C) automatic premium loan D) Cash dividend option. B) military service A) Accumulation at Interest Option C) minus indebtedness and without interest In a life insurance policy, which provision states who may select policy options, designate and name a beneficiary, and be the recipient of any financial benefits from the policy? The series is called All or Nothing. 9 Q What kind of policy does NOT typically require proof of insurability? The cash surrender value will also be reduced by any outstanding loan amount. C) Term life policies are the only type of insurance that allows policy loans P cannot assign ownership of the policy while premiums are being waived, Which of these are NOT an example of a Nonforfeiture option? C) policy and any verbal agreements When is the face amount of a Whole Life policy paid? Which statement is correct regarding the premium payment schedule for whole life policies? It is tax deductible C) the right to change a policy provision d. What price range is your specialty? B) during the last 12 months C) no beneficiary was ever named Taxable *Dividends are a return of unused premiums on which the insured has already paid taxes. Never tax deductible. A Tax deductible. B) pilot of personal airplane C) Accelerated rider The interest credited under this option is TAXABLE, whether or not the policyowner receives it. Which of the following is the process of getting oxygen from the environment to the tissues of the body? B) Entire contract A counselor receives a fee for advice, and can maintain a dual license as an agent and counselor. With the extended term option, you can choose to use the cash value in a whole life insurance policy to term insurance, allowing you to stop paying premiums. B) aviation Adam Hayes, Ph.D., CFA, is a financial writer with 15+ years Wall Street experience as a derivatives trader. S dies 1 year later of natural causes. d) The PPO will pay reduced benefits. 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. Eric's coverage is still in force because of which life insurance policy provision? . For traditional whole-life policies, the policyholder decides how they would like to access the policys cash value. 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. B) add-on Which of the following is considered to be an alternative to a life settlement? How is a life insurance policy dividend legally defined? Coverage can be added at specific events such as marriage or having a child Let us have a look at your work and suggest how to improve it! In what part of an insurance policy are policy benefits found? Void the policy only if it is discovered during the Contestable period and proven to be material, All of these Settlement options involve the systematic liquidation of the death proceeds in the event of the insureds death EXCEPT Reduced Paid-up Under an extended term nonforfeiture option, the policy cash value is converted to The payable premium amount steadily declines throughout the duration of the contract. B) Payor rider 2003-2023 Chegg Inc. All rights reserved. Reduced Premium. After reading about the changes in the government's role in the economy, write a one-page essay arguing whether you think those changes are helpful or harmful to the U.S. economy.
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