What does the entire contract clause in a life insurance policy refer to quizlet?

Question 1
Which of the following statements most correctly describes the relationship, if any, between the application and the insurance contract?

The application is completed under oath, so it may be voided.
Technically, the application is not a part of the contract, and the agent or the insured can change it.
The application is the contract.
*The application is part of the entire contract.
The entire contract provision states that the insurance policy and the application for it make up the entire contract. The application is normally attached to and made a part of the policy.
Question 2
What is the typical life insurance contract's reinstatement provision period?

one year
six months
five years
*three years, but may be longer depending on the case and the laws of the state that control the policy
The reinstatement provision lets policyowners put a lapsed policy back in force within a certain period. This period is typically three years but may be longer depending on the case and the laws of the state that control the policy.
Question 3
To reinstate his lapsed life insurance policy under a reinstatement agreement, Peter must provide all of the following, EXCEPT:

a written request or application for reinstatement
*a valid reason for the unpaid premiums
payment of all back premiums, plus interest
proof of insurability
To reinstate his lapsed policy, Peter must provide proof of insurability.
Question 4
If an insured, Nan, dies during her life insurance policy's grace period without having paid her premium, what is the insurance company's obligation?

The beneficiary gets the policy's cash surrender value, if any.
The company has no financial obligation.
In most cases, the insurer will pay the full death benefit.
*The insurer pays the death benefit after first deducting the unpaid premium.
That is not so. If the insured dies during the grace period without having paid the premium, the insurer deducts the unpaid premium from the death benefit before paying the balance to the beneficiary.

Question 1
Karen transfers all rights in her life insurance policy to her brother, David, in an absolute assignment. Who is typically responsible for paying the policy's premiums from that point forward?

Karen must pay the premiums.
The insurer suspends the premiums.
*David must pay the premiums.
Karen and David can decide between them who should pay the premiums.
Insurers are not in business of suspending premium payments.
Question 2
How long is the standard incontestability period?

one year from the application date
*two years from the date of issue
five years from the date of issue
31 days from the date of issue
Under most policies, the incontestability period is two years from the issue date.
Question 3
How long is the typical permanent life insurance policy's free-look period?

30 days
*10 days
5 days
15 days
The free-look provision gives the new policyowner a set period, usually ten days, in which to review the policy and to decide whether to keep it.
Question 4
All of the following statements regarding the practice of backdating a life insurance application are correct EXCEPT:

Most states do allow a policy to be backdated up to six months.
The policyowner must pay all premiums owed from the backdated issue date to the present.
The policy premium is based on the insured's age on the policy issue date.
*It effectively extends the incontestability period by adding the backdated period to the two-year incontestability period provided in the contract.
The premium amount agreed to in a policy is based on the insureds age at the time the insurance is written. If the insurer backdates the policy to a date before the insured's last birthday, the premium will be lower.

Question 1
In a collateral assignment, policyowners may (or must) do all the following, EXCEPT

borrow against any cash value that exceeds the loan security amount
change beneficiaries.
pay the premiums.
*surrender the policy.
Under a collateral assignment, the policyowner keeps most of the rights in the policy, including the right to borrow against the rest of the cash value above the amount provided as security.
Question 2
The entire contract provision specifies that all statements the policyowner makes in the application are considered which of the following?

*representations
warranties
claims
declarations
Statements the policyowner makes in the application are representations.
Question 3
Mary pays for her life insurance with an annual premium. However, she is thinking of switching to a monthly premium plan. Which of the following best describes the consequence that will result if she changes her mode of premium in this manner?

There is no way of determining how much more or less Mary will be paying by increasing the frequency of her premium payments.
Mary will end up paying less over time than if she continued paying annual premiums.
*Mary will end up paying more over time than if she continued paying annual premiums.
Mary will end up paying the same amount as if she had continued paying annual premiums.
Insurers have to add lost interest, plus a processing expense factor, to any premium payable more frequently than annual.
Question 4
As a legal contract, a life insurance requires all of the following elements, EXCEPT

offer
-basis
consideration
acceptance
Basis has different meanings in different contexts. In options trading, for example, "basis" is a term used to evaluate the value differential between a call option and a put option. Also referred to as the reversal/conversion rate, it is calculated by determining the costs and benefits of being long or short the underlying security.

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