Life & Health Insurance Exam Life & Health Insurance Policy Provisions and Riders 5

Question 1

Which of the following is an example of a policy rider that adjusts the death benefit to keep pace with inflation?

Accepted Answer

Cost of Living Adjustment (COLA) rider

Answer

The Cost of Living Adjustment (COLA) rider increases the policy's death benefit periodically based on inflation indices.

Question 2

A health insurance policy's 'Relation of Earnings to Insurance' provision would reduce benefits if:

Accepted Answer

Total disability benefits from all policies exceed the insured's predisability income

Answer

This provision limits total disability income benefits from all sources to prevent the insured from receiving more than their pre-disability income.

Question 3

What is the 'Reduced Paid-Up' nonforfeiture option?

Accepted Answer

The policy face amount is reduced and coverage continues as paid-up insurance with no further premiums

Answer

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.

Question 4

Under a life insurance policy, the 'Spendthrift clause' protects the beneficiary's proceeds from:

Accepted Answer

Creditors of the beneficiary before benefits are received

Answer

A Spendthrift clause prevents the beneficiary's creditors from attaching or garnishing life insurance proceeds before they are received.

Question 5

A long-term care insurance policy includes a 'restoration of benefits' provision. What does this mean?

Accepted Answer

Benefits are restored to the original maximum after the insured recovers and remains claim-free for a period

Answer

The restoration of benefits provision rebuilds the policy's maximum benefit pool if the insured recovers and remains without claims for a specified period.

Life & Health Insurance Exam Practice Test

Life & Health Insurance Exam Practice Test

Life & Health Insurance Exam Life & Health Insurance Policy Provisions and Riders 5