CMFAS Life Insurance M5 2

Question 1

What is the cash value of a life insurance policy?

Accepted Answer

The savings component that accumulates over time in permanent policies

Answer

Cash value is the savings portion of a permanent life insurance policy that grows over time. The policyholder can borrow against or withdraw this amount.

Question 2

What is the grace period in a life insurance policy?

Accepted Answer

The period after a premium due date during which the policy remains in force

Answer

The grace period is typically 30 days after the premium due date, during which the policyholder can pay the overdue premium without the policy lapsing.

Question 3

What is an endowment policy?

Accepted Answer

A policy that combines life insurance with savings, paying out at maturity or death

Answer

An endowment policy combines life insurance protection with a savings element. It pays out the sum assured either at maturity or upon the insured's death, whichever comes first.

Question 4

What is the contestability period?

Accepted Answer

A period (usually 2 years) during which the insurer can void a policy for misrepresentation

Answer

During the contestability period (usually the first 2 years), the insurer can investigate and void the policy if the insured made material misrepresentations in the application.

Question 5

What is a rider in a life insurance policy?

Accepted Answer

An additional benefit or provision added to the base policy

Answer

A rider is an add-on to a basic insurance policy that provides additional coverage or benefits, such as critical illness or accidental death coverage.

CMFAS Practice Test

CMFAS Practice Test

CMFAS Life Insurance M5 2