LOMA 281 Module 3 Questions with Correct Answers
Material misrepresentation - Answer-A misrepresentation that would affect an insurance company's evaluation of a proposed insured and, thus, gives the insurer grounds to avoid an insurance contract.
Fraudulent misrepresentation - Answer-A misrep...
LOMA 281 Module 3
Questions with
Correct Answers
Material misrepresentation - Answer-A misrepresentation that would affect an insurance
company's evaluation of a proposed insured and, thus, gives the insurer grounds to
avoid an insurance contract.
Fraudulent misrepresentation - Answer-A misrepresentation that was made with the
intent to induce the other party to enter into a contract and that did induce the innocent
party to enter into the contract.
Grace period provision - Answer-An insurance policy provision that specifies a length of
time following each renewal premium due date within which the premium may be paid
without loss of coverage.
Reinstatement - Answer-The process by which an insurer puts back into force 1) an
individual life insurance policy that was terminated because of nonpayment of renewal
premiums or 2) an individual life insurance policy that has been continued under the
extended term or reduced paid-up insurance nonforfeiture option.
Reinstatement provision - Answer-An individual life insurance provision that describes
the conditions the policyowner must meet to put the policy back into force after it has
been terminated because of nonpayment of renewal premiums or has been continued
under the extended term or reduced paid-up insurance nonforfeiture option.
Misstatement of age or sex provision - Answer-A life insurance policy provision that
describes the action the insurer will take to adjust the amount of the policy benefit in the
event that the age or sex of the insured is incorrectly stated.
Policy loan provision - Answer-A cash value life insurance policy provision that grants
the policyowner the right to take out a policy loan for an amount that does not exceed
the policy's cash value less one year's interest on the loan.
, Nonforfeiture provision - Answer-A cash value life insurance policy provision that sets
forth the options available to the policyowner if the policy lapses or if the policyowner
decides to surrender or terminate the policy.
Net cash surrender value - Answer-The amount the owner of a cash value life insurance
policy will receive upon surrendering the policy.
Automatic premium loan option - Answer-A cash value life insurance policy nonforfeiture
option under which the insurer will automatically pay an overdue premium for the
policyowner by making a loan against the policy's cash value as long as the cash value
equals or exceeds the amount of the premium due.
Extended term life insurance nonforfeiture option - Answer-A nonforfeiture option that
permiuts the owner of a cash value life insurance policy to discontinue premium
payments and use the policy's net cash surrender value as a net single premium to
purchase term insurance for the full coverage amount provided under the original policy
for as long a term as the net cash surrender value can provide.
Reduced paid up insurance nonforfeiture option - Answer-A nonforfeiture option that
permits the owner of a cash value life insurance policy to discontinue premium
payments and use the policy's net cash surrender value as a net single premium to
purchase paid-up life insurance of the same plan as the original policy.
Cash payment nonforfeiture option - Answer-A nonforfeiture option that permits the
owner of a cash value life insurance policy to discontinue premium payments and
surrender the policy in exchange for a lump-sum payment of the policy's cash surrender
value.
Exclusion - Answer-An insurance policy provision that describes the circumstances
under which the insurer will not pay the policy benefit following a loss.
Suicide exclusion provision - Answer-An individual life insurance policy provision that
excludes suicide as a covered risk for a specified period - usually two years - following
the date the policy is issued.
Waiver of premium for disability benefit - Answer-A supplemental life insurance policy
benefit under which the insurer promises to give up - to waive - its right to collect
premiums that become due while the insured is totally disabled.
Waiver of premium for payor benefit - Answer-A supplemental life insurance policy
benefit under which the insurer agrees to waive its right to collect a policy's renewal
premiums if the policyowner dies or becomes totally disabled.
Disability income benefit - Answer-A supplemental life insurance policy benefit that
provides a monthly income benefit to the policyowner-insured if he become totally
disabled when the policy is in force.
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