Universal life (UL) insurance is permanent life insurance with an investment savings component. Joanne has a $100,000 whole life policy with an accumulated $25,000 of cash value. His $100,000 Whole life policy contains a War Exclusion clause. Fixed Amount E and F are business partners. D) The policys cash values steadily decrease after 20 years, B) The policy may be paid up early by using policy dividends, A guaranteed issue insurance policy has no, A) initial premium requirement 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. D) irrevocable assignment. Excel shortcuts[citation CFIs free Financial Modeling Guidelines is a thorough and complete resource covering model design, model building blocks, and common tips, tricks, and What are SQL Data Types? P is the insured on a participating life policy. What kind of rider did S include on the policy? The clause may involve returning some portion of the total premiums paid, the cash surrender value of the policy, or a reduced benefit based upon premiumspaid beforethe policy lapses. Forfeiture is broadly defined as the loss of property for failing to obey the law, and that property is generally lost to the state. C) Insuring clause The option that provides an additional death benefit for a limited amount of time at the lowest possible cost is called a(n), Accidental Death and Dismemberment rider (AD&D). If the consumer price index has gone up 4%, how much may Ron increase the face value of the policy? \text { Wages Expense } & 137,000 & \\ revoke an absolute assignment Which type of rider will waive the premium on a childs life insurance policy if the parent paying the premium dies? fixed-period option. Bruce is involved in an accident and becomes totally and permanently disabled. The interest credited under this option is TAXABLE, whether or not the policyowner receives it. The face amount equal to the cash value. She would like to borrow $15,000 against the cash value. Her doctor said that her only chance of survival is an experimental treatment. D) Nonforfeiture options. D) Nonforfeiture clause. Which of these would limit a companys liability to provide insurance coverage? Increased proceeds can be provided through accumulation of interest AccountCashAccountsReceivableSuppliesPrepaidRentEquipmentAccumulatedDcprcciationOtherAssetsAccountsPayableUnearnedServiceRevenueNotePayable(due2022)CommonStockRetainedEarnings,12/31/2018ServiceRevenueWagesExpenseRentExpenseInterestExpenseTotalsDebit$3,10015,9004,2009,500625,00060,900137,000229,0004,500$1,089,100Credit$104,0009,40011,20050,000279,50037,000598,000$1,089,100. Quickly and professionally. A double indemnity benefit will be payable to Matts beneficiary if Matt, A) is killed while committing a felony B) Waiver of premium c) Beneficiary's consent The four essential elements of all legal contracts are offer and acceptance, consideration, competent parties, and legal purpose. b. $100,000, L takes out a life insurance policy and dies 10 years later. The rest are all possible exclusions. It is not taxable In a life insurance policy, which feature states that the policy will not cover certain risks? A life insurance policy which ensures that the premium will be paid if the insured becomes disabled has what kind of rider attached? Which of these is considered to be a Living Benefit option in a life insurance policy? What is the name of the provision which states that a copy of the application must be attached to the policy when issued? 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. All of the following are considered to be nonforfeiture options available to a policyowner EXCEPT. A) The policys cost basis is taxable A claimant wants to bring a recovery action against an insurance company for a loss claimed under a policy. Eric purchased a cash value life insurance policy six years ago. 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 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.. Which of the following statements is (are) true regarding life insurance policyholder dividends? If cash has accumulated in the policy, state law forbids companies from keeping it and cancelling the policy. A policy loan is issued by an insurance company and uses the cash value of a life insurance policy as collateral. 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 A) Insuring clause This rider is called a(n), A) Guaranteed insurability rider In order to project a classy image, an expensive seafood restaurant requires that its servers wear tuxedos . B) Probation period A) $400 \textbf{Rogers Coproration}\\ Which of these actions will the insurer take? Paid-up Additions Which dividend option would an insurer invest the policyowners money and add any interest earnings as the dividends accrue? C) It allows for cash advances to be paid against the death benefit if the insured becomes terminally ill B) Nonparticipating policies issue dividends C) Accelerated death benefit In most cases, the surrender cash value may be different from the cash value due to the policy owner. ? B) pilot of personal airplane Ss attained age "What Are Life Insurance Non-Forfeiture Options? Evidence of insurability is not required when the option is exercised C) Cash value is surrendered to policyowner The term policy ends after a fixed number of years as detailed in the policys nonforfeiture table. 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 Change the beneficiary, if revocable, Modify a provision in the insurance contract. C) transferable assignment B) Make a premium payment after the due date without any loss of coverage D) Premium decrease. You can find out more about our use, change your default settings, and withdraw your consent at any time with effect for the future by visiting Cookies Settings, which can also be found in the footer of the site. The option allows the policyholder to retain the death benefit without being required to make additional future premium payments. D) The amount of premiums paid will be returned with interest, C) The death benefit paid will be what the premium would be purchased at the correct age. war. A nonforfeiture clause is an element included in standard life insurance and long-term care insurance. a The premiums on their policy will never increase. The Consideration clause in a life insurance contract contains what pertinent information? D) Reinstatement, A whole life policy option where extended term insurance is selected is called a(n), A) dividend option An insureds inability to perform two or more activities of daily living may trigger which type of policy rider? Must have a terminal illness to qualify. C) aviation D) Payor benefit. A) It allows for a spouse to be added as a rider to a life insurance policy Inability of the insured to perform more than 2 Activities of Daily Living (ADLs), The Accidental Death and Dismemberment (AD&D) provision in a life insurance policy would pay additional benefits if the insured. He currently researches and teaches economic sociology and the social studies of finance at the Hebrew University in Jerusalem. J let her life insurance policy lapse 8 months ago due to nonpayment. N is covered by a Term Life policy and does not make the required premium payment which was due August 1. In 2010, P takes up scuba diving and dies in a scuba-related accident in 2011. Dorian exercised a nonforfeiture option by using his life policys cash value to purchase an extended term insurance option. D) the insured and beneficiary died at the same time. Whole Life Insurance: Whats the Difference? Surrendering the policys cash value Which situation accurately describes a reduced paid-up nonforfeiture option? Life Income. How are acts of war and aviation treated under a group life insurance policy? B) absolute assignment For some companies, this option may be automatic when surrendering a whole life insurance policy. She can reestablish coverage under which of the following provisions? There are no guarantees for the minimum amount of life insurance available in variable and universal life policies, which allow for variable investing. What does the grace period allow a life insurance policyowner to do? A) Reduction of premium dividend option An insurer can be protected from adverse selection with which policy provision? A) Net death benefit will be reduced if the loan is not repaid b) Interest only Nonforfeiture values include cash surrender, extended term and reduced paid-up. Which type of life policy contains a monthly mortality charge as well as self-directed investment choices? D) $4,000, A rider that assures premiums will be paid on a juvenile policy until the child reaches a specific age is called a(n), A) waiver of premium rider B) It allows for policy loans to be advanced to the insured in the event of unemployment 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. C) Paid-up additions A) Declarations \hline \text { Cash } & \$ 3,100 & \\ D) policy and attached application, Ownership of a life insurance policy may be temporarily transferred with a(n), A) collateral assignment Structured Query Language (known as SQL) is a programming language used to interact with a database. Excel Fundamentals - Formulas for Finance, Certified Banking & Credit Analyst (CBCA), Business Intelligence & Data Analyst (BIDA), Commercial Real Estate Finance Specialization, Environmental, Social & Governance Specialization, Cryptocurrency & Digital Assets Specialization (CDA), Business Intelligence Analyst Specialization, Commercial Banking & Credit Analyst (CBCA), National Association of Insurance Commissioners (NAIC), Financial Planning & Wealth Management Professional (FPWM). Cash For traditional whole-life policies, the owner decides which of four ways (see below) they would like to access the policys cash value. "What Are Life Insurance Non-Forfeiture Options? M had an annual life insurance premium payment due January 1. A life insurance policyowner was injured in an automobile accident which results in a total and permanent disability. He forgot to pay the premium that was due last week. The above question All of the following are considered to be nonforfeiture options available to a policyowner EXCEPT, Was part of Insurance MCQs & Answers. When is the face amount of a Whole Life policy paid? 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D) hazardous occupations. The nonforfeiture clause may also become available when the holder of a whole life insurance policy surrenders the policy. Which of the following is considered to be an alternative to a life settlement? Which life insurance policy provision will permit Elaine to use the life insurance proceeds before she dies to pay for her medical care? Which type of beneficiary is changeable at any point? C) accelerated benefit rider Which military service exclusion clause would pay upon his death? B) dies of a stroke Choosing the nonforfeiture extended term option allows the policy owner to use the cash value to purchase a term insurance policy with a death benefit equal to that of the original whole-life policy. 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. When you visit the site, Dotdash Meredith and its partners may store or retrieve information on your browser, mostly in the form of cookies. D) interest-only option. P will still receive declared dividends Besides his extensive derivative trading expertise, Adam is an expert in economics and behavioral finance. Are you having trouble answering the question All of the following are nonforfeiture options, EXCEPT:? Life Income, All of the following statements are true regarding a policys Grace period EXCEPT Interest only is a settlement option. Charitable gift of life insurance is a way of contributing to charity by taking out life insurance on yourself and naming a charity as a beneficiary. A) The face amount and policy premium are not affected by the payment Which of the following protects a policyowner from a misrepresentation caused by an innocent mistake? A) Waiver of premium Reduce your coverage for the remaining term of the policy and pay no futurepremiums. S dies 5 years later in 2008 and the insurer pays the beneficiary $10,500. What are collateral assignments normally associated with? from October 1 to December 31 is unpaid and unrecorded. Insurance companies can send delinquent interest accounts to a collection agency Each takes out a $500,000 life insurance policy on the other, naming himself as primary beneficiary. 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. Which of these require an offer, acceptance, and consideration? Diffusion Let us complete them for you. C) Reinstatement period Coverage will be adjusted to reflect the insureds true age if a misstatement of age is discovered. Surrender Value: What's the Difference? (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). B) Waiver of premium rider Permanent life insurance, long-term disability, and long-term care insurance policies may have nonforfeiture clauses. 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. A Its premium steadily decreases over time, in response to its growing cash value. Ron has a life insurance policy with a face value of $100,000 and a cost of living rider. It is taxed as capital gains Proceeds can be administered by the insurance company C) automatic premium loan Which of these is NOT a characteristic of the Accelerated Death Benefit option? A) Bank loans \end{array} D) juvenile waiver rider, If an insured dies during the grace period with no premiums paid, A) the policy would be payable, minus the premium amount Extended Term Reduced Paid-up Cash Surrender Life Income. B) Buyers Guide Thanks for choosing us. Ron's health insurance will not pay the full amount charged by the non-PPO doctor. Which nonforfeiture option has the highest amount of insurance protection? B) the coverage can be extended with a lump sum payment All of the following are Nonforfeiture options EXCEPT: . d) The PPO will pay reduced benefits. A) 12/15th of the policys face amount C) automatic premium loan rider However, during the early years of awhole life insurance policy, the savings portion brings little return compared to thepremiumspaid. An error was made on Marys life insurance application. A) Cash surrender c) Reducation of Premium Coverage can be added at specific events such as marriage or having a child C) Settlement options This provision is the, All of the following are nonforfeiture options EXCEPT. B) Reinstatement provision 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) Family income rider. D) One-Year Term Dividend Option, A life insurance policyowner does NOT have the right to, A) change a beneficiary Which of the following is the process of getting oxygen from the environment to the tissues of the body? B) incontestable period A) Entire contract provision \text { Other Assets } & 60,900 & \\ D) war. Which of the following does a policyowner NOT have a right to change? The policy owner does not forfeit the previous payments and is entitled to receive the policys cash value. C) waiver of premium The death benefit would be equal to the benefit in the original whole life insurance 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 non-payment. A) Payor options How many first time home buyers did you work with last year? 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. Fixed Period P purchases a $50,000 whole life insurance policy in 2005. D) Monthly income payments. A) Reinstatement clause B) Disability income rider b) The key employee has premiums deducted from his salary. When a misrepresentation on a life insurance policy application is discovered, what action may an insurance company take? Which situation accurately describes a reduced paid-up nonforfeiture option? D) The original death benefit listed on the policy minus any outstanding loans and interest, C) A prorated death benefit based on the amount of insurance the insureds premiums would have been if purchased at the correct age. Which of the following statements is TRUE? D) supplement. Let us have a look at your work and suggest how to improve it! The automatic premium loan provision is designed to, All of these statements concerning Settlement Options are true EXCEPT In permanent life insurance, the policyholder will not lose the life insurance policy entirely. A) Grace period automatically add the amount of interest due to the loan balance. An insurer will accept a premium from the insured and continue the coverage in full force as though it was NOT late during which time period? \text { Rent Expense } & 229,000 & \\ D) Mandatory provision, In order to activate the reinstatement clause of a lapsed life insurance policy, the insured MUST, A) remit all past-due premiums within the grace period Suppose the first residual is 12.0(instead of 2.0 ) and the last residual is -11.0(instead of -1.0). d) Alzheimer's disease While normally mental and nervous disorders or disease are excluded in long-term care policies, Alzheimer's disease is not. Under an extended term nonforfeiture option, the policy cash value is converted to answer choices A higher face amount than the whole life policy. Grace period terms are stated in the policy. Opt for reduced coverage with a reduced death benefit for the remaining term of the insurance. A counselor receives a fee for advice, and can maintain a dual license as an agent and counselor. \text { Accounts Receivable } & 15,900 & \\ James is the insured on a life insurance policy where his age was misstated on the application. B) The insurer withholds the cost basis 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. Deducted based on the income level. Work with our consultant to learn what to alter, Chapter 4- Policy Provisions, Options and Riders (Exam 2). The policy would retain a cash value component, but it would grow at a reduced rate. A) Policy has a decreased face amount g. Income taxes of$55,539 are owed but unrecorded and unpaid. C) the source of funding for administration fees With maintenance cost as the dependent variable and age, odometer miles, miles since last maintenance, and engine type as the independent variables, create a regression equation using statistical software by setting variable to 1. Instead, there are four options that the owner can choose from in order to access the accumulated cash value. Which statement is true if Ps premiums are waived due to a disability? d. Accumulated Depreciation-Equipment. Which of the following statements is true? C) Waivers \text { Service Revenue } & & 598,000 \\ 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. Which of these is NOT considered to be a common life insurance nonforfeiture option? Past-due interest payments not paid after 3 months will void the policy 4. Cash Value vs. D) Policy loans will no longer be available. h. Supplies. Life insurance policyholders can select one of four nonforfeiture benefit options: the cash surrender value, extended term insurance, loan value, and paid-up insurance. These options include: If the policyholder does not choose any of the above options after the policy is terminated or surrendered, the insurance company will go for the payout option stipulated in the life insurance policy of the owner. Mississippi. B) 1/2 of the policys face amount All of the following are dividend options EXCEPT: Fixed-period installments. An analysis indicates that prepaid rent on December 31 should be $2,300. A criminal conviction is required for civil forfeiture. 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? Which of these describe a participating life insurance policy? C) take out a policy loan D) Grace period. \textbf{December 31, 2019} The policyholder will receive a partial or full refund of premiums paid if the policy lapses after a defined period due to missed premium payments. B) guaranteed insurability rider D) Bill the policyowner for back premiums. What time period allows an insureds life insurance policy to remain in force even if the premium was not paid on the due date? When a policy is in force for a longer duration, the better the cash values and the nonforfeiture values. a. c. What is your commission? C) Dividends are always taxable 2003-2023 Chegg Inc. All rights reserved. Unpaid interest will be added to your loan amount and will be subject to compounding. D) Full face amount. 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. Life insurance is a contract in which an insurer, in exchange for a premium, guarantees payment to an insureds beneficiaries when the insured dies. 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. Who the policyowner is and what rights the policyowner is entitled to. A) Insured becomes unemployed Nonforfeiture clauses offer protection in the event a policyholder stops paying their premium. C) Provides for the early payment of some portion of the policy face amount should be insured suffer from a terminal illness Which of the following is CORRECT regarding the death benefit amount? The cash surrender value will also be reduced by any outstanding loan amount. 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. Use the accumulated cash value to pay the remaining future premiums. During the claim process, the insurer discovers that L had understated her age on the application. 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. 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 b) Within 3 years. C) The insurers obligation to pay a death benefit upon an approved death claim A) Transfer ownership of the policy Kurt is an active duty serviceman who was recently killed in an accident while home on leave. 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 . f. Service Revenue. o paid - up additions extended term insurance . C) waiting period Which of these require an offer, acceptance, and consideration? Which rider would pay a monthly amount because of this disability? 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. Under a life insurance policy, what does the insuring clause state? B) The policy will be voided with no death benefits paid Cash Surrender B) unemployed B) Changes in the insuring clause A) Contest the terms of the policy after the issue date Claims are denied under the Suicide clause of the policy, Which of these statements about a Guaranteed Insurability Option rider is NOT TRUE? 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 D) beneficiary assignment, Mike and Ike are 30 year old identical twins. If the teacher wants an increasing Death Benefit to protect against inflation, the teacher should select which of the following Dividend Options? If thats the case, you dont have to worry anymore. Taxable C. Nontaxable D. Tax Deductible B. 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. D) Settlement options. C) Incontestability C) Premium increase B) $800 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. The treatment is expensive and is not covered by Elaine's health insurance. The restaurant hires only male wait staff. His insurance policy continues in force without payment of further premiums. Why would you not want to prepare financial statements What provision in a life insurance policy states that the application is considered part of the contract?
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