Life & Health Insurance Exam Life & Health Insurance Policy Provisions and Riders 4 — Questions and Answers
Question 1: A life insurance policy's grace period has expired and the policy has lapsed. Which nonforfeiture option typically provides the longest continued coverage?
- Cash Surrender Value
- Reduced Paid-Up insurance
- Extended Term insurance (Correct answer)
- Policy loan
Correct answer: Extended Term insurance
Extended Term insurance uses the cash value to purchase term insurance for the full face amount for as long as the cash value will support it, often providing the longest duration of coverage.
Question 2: Under a health insurance policy, what is the purpose of the 'physical examination and autopsy' provision?
- It allows the insured to waive a required medical exam
- It gives the insurer the right to examine the insured or conduct an autopsy when a claim is contested (Correct answer)
- It requires the insurer to pay for routine physicals
- It mandates annual health screenings for policyholders
Correct answer: It gives the insurer the right to examine the insured or conduct an autopsy when a claim is contested
This provision grants the insurer the right to examine the claimant or order an autopsy (where permitted) to verify the legitimacy of a claim.
Question 3: A policyowner names their spouse as the primary beneficiary but does not designate a contingent beneficiary. The spouse predeceases the insured. Who receives the death benefit?
- The insured's children automatically
- The insured's estate (Correct answer)
- The primary beneficiary's estate
- The state government
Correct answer: The insured's estate
If the primary beneficiary predeceases the insured and no contingent beneficiary is named, the death benefit goes to the insured's estate.
Question 4: The Accidental Death Benefit rider is also commonly known as:
- Guaranteed Insurability rider
- Double Indemnity rider (Correct answer)
- Cost of Living rider
- Term Conversion rider
Correct answer: Double Indemnity rider
The Accidental Death Benefit rider is commonly called Double Indemnity because it typically pays twice the face amount if death results from an accident.
Question 5: Which provision in a life insurance policy prevents the insurer from denying a death claim based on misrepresentations in the application after the policy has been in force for two years?
- Grace period provision
- Incontestability clause (Correct answer)
- Entire Contract provision
- Reinstatement clause
Correct answer: Incontestability clause
The Incontestability clause bars the insurer from contesting the policy's validity based on misrepresentation after the policy has been active for two years.
Question 6: A policyholder wants to convert their group term life insurance to individual permanent coverage upon leaving employment. Which provision allows this?
- Coordination of Benefits provision
- Conversion privilege (Correct answer)
- Portability provision
- Continuation of Coverage provision
Correct answer: Conversion privilege
The Conversion privilege allows a group life insurance certificate holder to convert to an individual permanent policy within a set period after leaving the group, without evidence of insurability.
Question 7: Under the 'Legal Actions' provision in a health insurance policy, what is the minimum time period an insured must wait after submitting proof of loss before filing suit?
- 30 days
- 60 days (Correct answer)
- 90 days
- 6 months
Correct answer: 60 days
The Legal Actions provision typically requires the insured to wait at least 60 days after submitting proof of loss before initiating legal action against the insurer.
Life & Health Insurance Exam Life & Health Insurance Policy Provisions and Riders 4
A life insurance policy's grace period has expired and the policy has lapsed.
Which nonforfeiture option typically provides the longest continued coverage?