Policy Riders, Provisions, Options, and Exclusions
A participating policyowner in good health wants each declared dividend to increase the amount of insurance without new underwriting. Which use fits?
Answer and explanation
Answer: B. NAIC guidance on participating whole life states that dividends can be used to lower premiums or buy more coverage, and buying additional coverage is what raises the amount of insurance. Cash, an interest-bearing deposit, and loan repayment each put the dividend to a different use that leaves the face amount unchanged.Source: NAIC — Life Insurance — Whole Life Insurance; buying more coverage
More policy riders, provisions, options, and exclusions questions
- An insurer wants to rely on a company underwriting manual to deny a claim, although the manual was never attached to the policy. What does the entire contract provision mean for that argument?
- An owner adds a spouse term rider to a base whole life policy. How is coverage structured for the spouse?
- An owner creates a trust for minor children and names the trust as policy beneficiary. What is the trustee's relevant role after the insured's death?
- An owner names 'my children, per stirpes.' One child dies before the insured but leaves two children. What result is the designation intended to produce?
- An owner signs a policy assignment before the insurer receives notice. The insurer takes an allowed action without knowledge of it. Under the Compact standard, how is the timing handled?
- An owner wants only the children who survive the insured to divide the class benefit equally, without preserving a deceased child's branch. Which designation most directly expresses that intent?
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