Life & Health Insurance Exam Life & Health Insurance Policy Provisions and Riders 2 — Questions and Answers
Question 1: A policyholder submits a claim 10 months after an accidental injury. The policy has a 1-year proof-of-loss requirement. What happens?
- The claim is denied automatically
- The claim is valid because it was filed within the time limit (Correct answer)
- The insurer may reduce the benefit by 50%
- The policyholder must refile within 30 days
Correct answer: The claim is valid because it was filed within the time limit
The claim is valid because it was submitted within the policy's 1-year proof-of-loss period.
Question 2: Which provision requires that if an insured misstates their age on an application, benefits will be adjusted to what the premium paid would have purchased at the correct age?
- Incontestability clause
- Misstatement of Age provision (Correct answer)
- Entire Contract provision
- Reinstatement clause
Correct answer: Misstatement of Age provision
The Misstatement of Age provision adjusts benefits rather than voiding the policy when age is misstated.
Question 3: A Waiver of Premium rider is triggered when the insured becomes totally disabled. After recovery, how does premium payment typically resume?
- Premiums are permanently waived
- Premiums resume immediately upon recovery (Correct answer)
- Premiums resume after a 90-day grace period post-recovery
- The policy must be reapplied for
Correct answer: Premiums resume immediately upon recovery
Once the insured recovers from total disability, they must resume paying premiums to keep the policy in force.
Question 4: Which rider gives a policyowner the right to purchase additional insurance at specified future dates without evidence of insurability?
- Accidental Death Benefit rider
- Cost of Living rider
- Guaranteed Insurability rider (Correct answer)
- Return of Premium rider
Correct answer: Guaranteed Insurability rider
The Guaranteed Insurability rider allows purchase of additional coverage at option dates without proving insurability.
Question 5: Under the Free Look provision, if a policyholder returns the policy within the free-look period, what refund is typically issued?
- Refund of premiums minus administrative fees
- Full refund of all premiums paid (Correct answer)
- Refund only if no claims were filed
- Pro-rated refund based on time elapsed
Correct answer: Full refund of all premiums paid
The Free Look provision entitles the policyholder to a full premium refund if the policy is returned within the specified period.
Question 6: A life insurance policy lapses due to nonpayment. The insured later wants to reinstate. Which of the following is typically NOT required for reinstatement?
- Payment of overdue premiums with interest
- Evidence of insurability
- Satisfaction of any outstanding policy loans
- A new application with a higher face amount (Correct answer)
Correct answer: A new application with a higher face amount
Reinstatement restores the original policy; a new application for a higher face amount is not part of the reinstatement process.
Question 7: Which health insurance provision limits the insurer's right to contest a claim based on misrepresentations after a policy has been in force for a specified period?
- Elimination period
- Incontestability clause (Correct answer)
- Coordination of Benefits provision
- Subrogation clause
Correct answer: Incontestability clause
The Incontestability clause prevents the insurer from denying claims due to misrepresentation after the policy has been active for the specified period (usually 2 years).
Life & Health Insurance Exam Life & Health Insurance Policy Provisions and Riders 2
A policyholder submits a claim 10 months after an accidental injury.
The policy has a 1-year proof-of-loss requirement.
What happens?