Insurance Life & Health Insurance 5

Question 1

A 'spendthrift clause' in a life insurance policy is designed to:

Accepted Answer

Protect proceeds from the beneficiary's creditors by restricting their ability to assign or accelerate benefits

Answer

The spendthrift clause prevents a beneficiary from assigning future installment payments and shields those payments from the beneficiary's creditors.

Question 2

Which long-term care insurance benefit trigger is NOT typically required for benefits to begin?

Accepted Answer

Hospitalization for at least 3 consecutive days

Answer

Modern long-term care policies (post-HIPAA) require only an ADL or cognitive impairment trigger; they do not require prior hospitalization, which was a common requirement under older policies.

Question 3

An 'accelerated death benefit' rider allows a terminally ill insured to:

Accepted Answer

Receive a portion of the policy's death benefit while still living

Answer

The accelerated (or living) benefit rider lets a terminally ill insured access a portion of the death benefit early, typically when life expectancy is 12–24 months or less.

Question 4

Which of the following best describes the 'coordination of benefits' (COB) rule in group health insurance?

Accepted Answer

It prevents duplicate payment so that total benefits from all policies do not exceed 100% of covered expenses

Answer

COB rules determine which plan is primary and which is secondary, ensuring the combined payment does not exceed the actual claim amount.

Question 5

What is the purpose of the 'entire contract' provision in an insurance policy?

Accepted Answer

It states that the policy and attached application constitute the complete agreement between the parties

Answer

The entire contract provision prevents the insurer from using documents other than the policy and the signed application as evidence of the contract's terms, protecting the insured from unknown internal underwriting guidelines.

Insurance Practice Test

Insurance Practice Test

Insurance Life & Health Insurance 5