All of the following are Nonforfeiture options EXCEPT A Extended term B Reduced paid-up C Interest only D Cash surrender `````C Interest only Which statement is NOT true regarding a Straight Life policy? B) waiver of premium A) Accidental death rider Which of these describe a participating life insurance policy? S buys a $10,000 Whole Life policy in 2003 and pays an annual premium of $100. Which policy provision protects the policyowner from unintentional lapse of the contract? 40% taxable, similar to a capital gain B. 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 . reduced paid-up insurance. B) Reduced paid-up insurance In a life insurance policy, which feature states that the policy will not cover certain risks? It stipulates that 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. D) war, An insured individual and the policys beneficiary die from the same accident. Cash Value vs. B) incontestable period Which situation accurately describes a reduced paid-up nonforfeiture option? Recent Examples on the Web This relatively unknown nonforfeiture option is called a life settlement. A nonforfeiture clause is an insurance policy clause that is included in standard life insurance and long-term care insurance. Quickly and professionally. \text { Wages Expense } & 137,000 & \\ Beneficiary will be paid the Death Benefit. While investigating the claim, the insurer discovered material misrepresentations made by P during the application process. B) Changes in the insuring clause c) The agent An agent represents the company. What is an insurer required to do when faced with an error made under the Misstatement of Age provision? b) The key employee has premiums deducted from his salary. Whose life is covered on a life insurance policy that contains a payor benefit clause? C) the right to change a policy provision B) Nonparticipating policies issue dividends The correct answer is "Automatic Premium Loan Option". D) Grace period, All of these are standard exclusions found in a life insurance policy EXCEPT, A) hazardous occupations C) The policys premiums will increase after 20 years S has a Whole Life policy with a premium payment due soon. How are policyowner dividends treated in regards to income tax? P purchases a $50,000 whole life insurance policy in 2005. Extended Term 2. D) hazardous jobs, A provision in a whole life policy that allows a policyowner to terminate the policy in return for a reduced paid-up policy of the same type is called a(n), A) insuring clause A) The policy may be paid up early by using accumulated cash values Forfeiture is broadly defined as the loss of property for failing to obey the law, and that property is generally lost to the state. A) Active The policy value, therefore, should reflect the effects of inflation upon the economy. b) Interest only Nonforfeiture values include cash surrender, extended term and reduced paid-up. C) completely and permanently disabled f. Service Revenue. C) collateral assignment C) Allows for a full refund after policy delivery Which of these require an offer, acceptance, and consideration? Which of the following statements about accumulated interest earned on dividends from an insurance policy is TRUE? beneficiarys age, M has an insurance policy that also has an outstanding policy loan at the time of Ms death. The restaurant hires only male wait staff. With the cash surrender value option, the policy owner terminates the policy and receives the remaining cash value within six months. 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. An insureds inability to perform two or more activities of daily living may trigger which type of policy rider? A) Cash surrender Nonforfeiture clauses offer protection in the event a policyholder stops paying their premium. You can learn more about the standards we follow in producing accurate, unbiased content in our. B) the death benefit 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. "What Are Life Insurance Non-Forfeiture Options? In a reduced paid-up insurance option, the policy owner receives a lower amount of payments made as premiums for the original whole life insurance. o paid - up additions extended term insurance . D) The agents obligation to pay a death benefit upon an approved death claim, C) The insurers obligation to pay a death benefit upon an approved death claim. 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 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. 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) experiencing financial hardship. The option allows the policyholder to retain the death benefit without being required to make additional future premium payments. Which policy provision is responsible for this? Such an option considers the saving component of the policy. Whole life insurance is permanent life insurance that pays a benefit upon the death of the insured and is characterized by level premiums and a savings component. B) Face amount of the new policy equals that of the original policy D) Bill the policyowner for back premiums. Unpaid interest will be added to your loan amount and will be subject to compounding. An insured is past due on his life insurance premium, but is still within the Grace Period. Which of the following statements is (are) true with respect to life insurance policy loans? cash (lump sum). The meaning of NONFORFEITURE is failure or refusal to forfeit something often used before another noun. 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. An error was made on Marys life insurance application. To keep advancing your career, the additional CFI resources below will be useful: Within the finance and banking industry, no one size fits all. The nonforfeiture benefit is designed to ensure that if you lapse your policy (i.e., stop paying premiums) after a specified number of years, you retain some benefits from the policy. The above question All of the following are considered to be nonforfeiture options available to a policyowner EXCEPT, Was part of Insurance MCQs & Answers. Which of the following areas do errors commonly occur on applications and for which the incontestable clause does NOT apply? The automatic premium loan provision is designed to, All of these statements concerning Settlement Options are true EXCEPT The series is called All or Nothing. D) interest-only option. C) Reinstatement period Which of the following is the process of getting oxygen from the environment to the tissues of the body? The death benefit would be equal to the benefit in the original whole life insurance policy. This rider is called a(n), A) Guaranteed insurability rider Explanation: (Life Insurance Policy Provisions, Options and Riders)There are only three non-forfeiture options: 1) Cash Surrender, 2) Reduced Paid-Up and the automatic option, 3) Extended Term. C) resubmit a new life insurance application All of the following life insurance policies develop a cash value EXCEPT term life insurance. 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 action will the insurer take? Which of the following statements is (are) true regarding life insurance policyowner dividends? A life insurance policy normally contains a provision that restricts coverage in the event of death under all of the following situations EXCEPT. Correct answer: (D) the policy may be paid up early by using policy dividends. Which of the following protects a policyowner from a misrepresentation caused by an innocent mistake? Instead, you can access your accumulated cash value with the following options: If the policyholder does not make a selection, the terms of the policy will generally stipulate which option would go into effect if the policy lapses or is surrendered. 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 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? Policyholders can choose to access the policy's cash value through cash . dividend amount used toward purchase B) provide evidence of insurability to the insurer B) Payor rider B) payor rider Only the beneficiary may select, In a Life insurance contract, an insurance companys promise to pay stated benefits is called the. If the consumer price index has gone up 4%, how much may Ron increase the face value of the policy? B) Paid-up additions Accumulation at Interest 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. D) provide a valid reason for the lapse, B) provide evidence of insurability to the insurer. Which of the following statements is true? C) Term life policies are the only type of insurance that allows policy loans C) Paid-up option C) Incontestability What does the ownership clause in a life insurance policy state? 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} How to use nonforfeiture in a sentence. However, the death benefit that surviving dependents of the policy owner would receive is lower than the amount of cash value in the original life insurance policy. All of the following are nonforfeiture options EXCEPTo paid-up additions extended term insurance. All of the following are optional methods of settlement after the insured has died EXCEPT life income option. A) The policys cost basis is taxable D) Policy loans will no longer be available. How many of each item is in stock? All of these are valid policy dividend options for a life insurance policyowner EXCEPT Kurt is an active duty serviceman who was recently killed in an accident while home on leave. 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. Modify a provision in the insurance contract AILife.com. C) minus indebtedness and without interest Irrevocable beneficiaries must give permission to the policyowner in order for the beneficiary to be changed. Past-due interest on a policy loan is added to the total debt Plot the fitted values on the horizontal axis and the residuals on the vertical axis. e. Wages in the amount of $3,450 are owed but unpaid and unrecorded at year end. However, when the policy is terminated or the owner surrenders the policy, the death benefit ceases to exist. Claims are denied under the Suicide clause of the policy, Which of these statements about a Guaranteed Insurability Option rider is NOT TRUE? Which rider provides coverage for a child under a parents life insurance policy? P will still receive declared dividends C) all remaining cash values are paid to the policyowner Grace period terms are stated in the policy. C) Entire Contract Quickly and professionally. Which life insurance rider typically appears on a Juvenile life insurance policy? B) the coverage can be extended with a lump sum payment Whole Life Insurance: Whats the Difference? How are acts of war and aviation treated under a group life insurance policy? The insurer will deduct the outstanding loan balance from the. If the teacher wants an increasing Death Benefit to protect against inflation, the teacher should select which of the following Dividend Options? D) accidental death. Your email address will not be published. 3. How much will Ds beneficiarys receive? policy has a decreased face amount A life insurance policyowner does NOT have the right to. revoke an absolute assignment The policy would retain a cash value component, but it would grow at a reduced rate. C) Paid-up additions $100,000, L takes out a life insurance policy and dies 10 years later. 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. c. What is your commission? Which nonforfeiture option has the highest amount of insurance protection? 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. B) Pay age-corrected benefits Reduced Paid-Up B) Purchase additional coverage with no evidence of insurability required A Medicare Supplement policy must provide coverage for pre-existing conditions after the policy has been in force for a) 1 year b) 2 years c) 90 days d) 6 months. fare-paying passenger. Increased proceeds can be provided through accumulation of interest D and his wife divorce and D remarries, transferring ownership of his policy to his new wife. C) nonforfeiture option. "What Are Life Insurance Non-Forfeiture Options? A) Incontestable period Which of these types of life insurance allows the policyowner to have level premiums and to also choose from a selection of investment options? a. Prepaid Rent. C) It allows for cash advances to be paid against the death benefit if the insured becomes terminally ill A) Policy has a decreased face amount In 2010, P takes up scuba diving and dies in a scuba-related accident in 2011. B) policy and all sales material Which of these would be considered a Limited-Pay Life policy? D) Full face amount. What is the name of the provision which states that a copy of the application must be attached to the policy when issued? B) Period of time it takes for a policys underwriting to compete All of the following are nonforfeiture options, EXCEPT: a. D) Accumulation at interest. D) Certificate of Authority, All of these are valid policy dividend options for a life insurance policyowner EXCEPT, A) cash outlay to the policyowner Coverage can be added at specific ages, Evidence of insurability is required when the option is exercised. However, during the early years of awhole life insurance policy, the savings portion brings little return compared to thepremiumspaid. For an individual who is NOT covered by an employer-sponsored plan, IRA contributions are 1. C) One-year term Discover your next role with the interactive map. A) The face amount and policy premium are not affected by the payment M had an annual life insurance premium payment due January 1. b. A long-term care rider in a life insurance policy pays a daily benefit in the event of which of the following? Are you having trouble answering the question All of the following are nonforfeiture options, EXCEPT:? Which provision will pay a portion of the death benefit prior to the insureds death due to a serious illness? B) add-on A policy loan is issued by an insurance company and uses the cash value of a life insurance policy as collateral. Which of the following is NOT part of an insurance contract? D) war. B) Policy exclusion A) The original face amount will be paid to the beneficiary Florida Laws and Rules Pertinent to Insurance, Life Insurance Policies - Provisions, Options, Fundamentals of Financial Management, Concise Edition, Daniel F Viele, David H Marshall, Wayne W McManus, Chapter 3 - Legal Concepts of the Insurance C. C) Premium increase 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. Which of these arrangements allows one to bypass insurable interest laws? C) Return of premium provision g. Income taxes of$55,539 are owed but unrecorded and unpaid. c) Reducation of Premium D) Insured has become terminally ill. Past due premiums are waived All of the following are considered to be nonforfeiture options available to a policyowner EXCEPT. He forgot to pay the premium that was due last week. This provision is called a(n). C) accelerated benefit rider What action can a policyowner take if an application for a bank loan requires collateral? D) grace period. Diffusion Let us complete them for you. How many first time home buyers did you work with last year? When a misrepresentation on a life insurance policy application is discovered, what action may an insurance company take? She would like to borrow $15,000 against the cash value. d) Revocable Revocable beneficiares can be changed at any point. A) Payor options I. P is the insured on a participating life policy. C) Paid-Up Additions Option Which life policy is designed to provide the policyowner a hedge against the effects of inflation? What action will the insurer take? B) The insurer withholds the cost basis C) Accidental Death Rider Home Flashcards Chapter 4- Policy Provisions, Options and Riders (Exam 2), A waiver of premium rider allows an insured to waive premium payments if the insured is, A) temporarily disabled C) aviation Which of these are NOT an example of a Nonforfeiture option? Which of these types of policies may NOT have the Automatic Premium Loan provision attached to it? B) Free-look period Give your reasons. N is a student pilot with a large life insurance policy. D) Extended term rider, In a life insurance policy, the entire contract consists of, A) policy and conditional receipt Which of the questions would you be unlikely to ask when interviewing a real estate agent? B) the right to contest the terms of the policy Term vs. A) Policy B) Status Full coverage continues 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. Instead, there are four options that the owner can choose from in order to access the accumulated cash value. When the term insurance expires, A) he has the option of resuming the original policy and paying the same premium B) Dividend option Overall, it's the accumulated portion of a permanent life insurance policy's cash value that is available to the policyholder upon surrender of the policy. Life Income, All of the following statements are true regarding a policys Grace period EXCEPT C) Period of time after a policy is issued and before it is delivered to policyowner C) reinstatement provision 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? Surrender Value: What's the Difference? Which of these is NOT a type of agent authority? Which of the following statements is TRUE? B) pilot of personal airplane Universal life (UL) insurance is permanent life insurance with an investment savings component. Question 8 30 seconds Q. \text { Account } & \textbf { Debit } & \textbf { Credit } \\ Which of these actions is taken when a policyowner uses a Life Insurance policy as collateral for a bank loan? . \text { Supplies } & 4,200 & \\ \end{array} Standard life insurance and long-term care insurance policies may have a nonforfeiture clause. Unlike conventional loans, policy loans don't necessarily need to be paid back. b) Cash Surrender If Ron goes to a doctor who is not a PPO provider, what will happen? Which of these actions will the insurer take? D) would be subject to a Federal estate tax, B) would not be treated as taxable income, The free-look provision gives the policyowner, A) the right to return the policy for a partial refund within a specified number of days \text { Other Assets } & 60,900 & \\ All of the following are optional methods of settlement after the insured has died EXCEPT. Which of these Nonforfeiture Options continue a build-up of cash value? His $100,000 Whole life policy contains a War Exclusion clause. The insurance company guarantees a minimum cash value for the insurancepolicy after a specific period, typically three years from when the policy starts. C) The death benefit paid will be what the premium would be purchased at the correct age Ron joins the PPO provided by his employer. 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. Consider consulting a financial advisor who can guide you on choosing an option that will best fit your circumstances. What does the grace period allow a life insurance policyowner to do? Insurance companies can send delinquent interest accounts to a collection agency D) a source of funding a term rider to the policy, A) the policy loan value which the insured may borrow against. The policy is then issued with no scuba exclusions. One life insurance policy provision specifies that the insurer cannot deny payment to the beneficiary because of concealment or misrepresentation if the life insurance policy has been in force for two years during the insured's lifetime. 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 Mike buys a 10-year renewable term policy. Which of the following is NOT a common life insurance policy rider? However, any money you take out will be deducted from the death benefit that goes to your beneficiaries. In what part of an insurance policy are policy benefits found? The treatment is expensive and is not covered by Elaine's health insurance. reduced paid-up insurance. A) Martial status D) Life income annuity. Feel free to get in touch with us via email. She died January 10 without making the premium payment. James is the insured on a life insurance policy where his age was misstated on the application. All of the following are TRUE statements regarding the accumulation at interest option EXCEPT The interest credited under this option is not taxable since it remains inside the insurance policy. \hline \text { Cash } & \$ 3,100 & \\ D) Automatic premium loan provision, Matt is applying for life insurance and requests a double indemnity rider. \text { Interest Expense } & \underline{~~~~~~~~~~4,500} &\underline{~~~~~~~~~~~~~~~~~~~} \\ ", "Standard nonforfeiture law for life insurance.". P will have to pay income taxes on the amount of premiums waived D) Payor benefit. Ike purchases a whole life policy. All of the following are Nonforfeiture options EXCEPT a) Reduced paid-up b) Interest only c) Cash surrender d) Extended term. Set the qualitative variable to 0 if the engine type is a diesel. For example, if you purchase a policy when you were 20 and you paid until age 55, you would receive a term policy that is less than 35 years. The remaining cash value may be used to purchase an annuity free of commissions or expenses. In order to project a classy image, an expensive seafood restaurant requires that its servers wear tuxedos . Of the following dividend options, which of these is taxable? D) Cash surrender. a) Both irrevocable and Revocable. fare-paying passenger. When an accidental death benefit is added to a whole life policy, how does this affect the policys cash value? Which type of beneficiary is changeable at any point? a) A client with amyotrophic lateral sclerosis (ALS) tells the nurse, "Sometimes I feel so frustrated. The action must be brought a) Within 2 years. type of life insurance All of the following are Nonforfeiture options EXCEPT: . 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C) Accelerated death benefit How do life insurance companies handle cases where the insured commits suicide within the contracts stated Contestable period? How much will the insurer pay? Which of these require an offer, acceptance, and consideration? B) Waiver of Premium C) Accelerated rider An automatic premium loan is not considered a Nonforfeiture Option. C) Insured has had policy in force for a specified number of years Refer to the earlier problem. P cannot assign ownership of the policy while premiums are being waived, Which of these are NOT an example of a Nonforfeiture option?
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