Life & Health Insurance Policy Provisions and Riders Flashcards
7 cards from real Life & Health Insurance Exam practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Life & Health Insurance Policy Provisions and Riders flashcards as text
Which of the following is an example of a policy rider that adjusts the death benefit to keep pace with inflation?
Answer: Cost of Living Adjustment (COLA) rider
The Cost of Living Adjustment (COLA) rider increases the policy's death benefit periodically based on inflation indices.
A health insurance policy's 'Relation of Earnings to Insurance' provision would reduce benefits if:
Answer: Total disability benefits from all policies exceed the insured's predisability income
This provision limits total disability income benefits from all sources to prevent the insured from receiving more than their pre-disability income.
What is the 'Reduced Paid-Up' nonforfeiture option?
Answer: The policy face amount is reduced and coverage continues as paid-up insurance with no further premiums
The Reduced Paid-Up option uses the cash value to purchase a smaller permanent policy of the same type that requires no further premium payments.
Under a life insurance policy, the 'Spendthrift clause' protects the beneficiary's proceeds from:
Answer: Creditors of the beneficiary before benefits are received
A Spendthrift clause prevents the beneficiary's creditors from attaching or garnishing life insurance proceeds before they are received.
A long-term care insurance policy includes a 'restoration of benefits' provision. What does this mean?
Answer: Benefits are restored to the original maximum after the insured recovers and remains claim-free for a period
The restoration of benefits provision rebuilds the policy's maximum benefit pool if the insured recovers and remains without claims for a specified period.
Which settlement option pays the beneficiary a fixed dollar amount each period until both principal and interest are exhausted?
Answer: Fixed Amount option
The Fixed Amount option pays a specified dollar amount per period until the proceeds and accumulated interest are depleted.
A long-term disability policy defines disability as the inability to perform 'any occupation.' How does this compare to an 'own occupation' definition?
Answer: 'Any occupation' is harder to qualify for benefits than 'own occupation'
Under an 'any occupation' definition, the insured must be unable to work in any job for which they are reasonably suited, making it harder to qualify for benefits compared to 'own occupation.'