LLQP Policy Provisions and Riders 4 — Questions and Answers
Question 1: A life insurance policy's 'entire contract' provision states that the policy document and which other item together form the complete agreement?
- The agent's sales illustrations
- The application submitted by the insured (Correct answer)
- The insurer's internal underwriting guidelines
- The beneficiary designation form only
Correct answer: The application submitted by the insured
The entire contract provision specifies that the policy and the original application together constitute the complete contract between the insurer and the insured.
Question 2: Which rider allows a policyowner to purchase additional life insurance at specified future dates without providing evidence of insurability?
- Waiver of premium rider
- Guaranteed insurability rider (Correct answer)
- Accelerated death benefit rider
- Cost of living adjustment rider
Correct answer: Guaranteed insurability rider
The guaranteed insurability rider grants the right to buy additional coverage at designated option dates regardless of the insured's health status at that time.
Question 3: Under the incontestability clause, after how many years can an insurer generally no longer contest a life insurance policy for misrepresentation on the application?
- 1 year
- 2 years (Correct answer)
- 3 years
- 5 years
Correct answer: 2 years
Most jurisdictions require the incontestability period to be no longer than two years, after which the insurer cannot void the policy based on application misrepresentations.
Question 4: A payor benefit rider on a juvenile life insurance policy pays the premiums if the:
- Child becomes disabled
- Child reaches age 21
- Adult premium payor dies or becomes disabled (Correct answer)
- Policy lapses due to nonpayment
Correct answer: Adult premium payor dies or becomes disabled
The payor benefit rider waives premiums on a child's policy if the adult responsible for premium payments dies or becomes totally disabled.
Question 5: What does the 'misstatement of age or sex' provision in a life insurance policy allow the insurer to do?
- Cancel the policy immediately upon discovery
- Adjust the death benefit to what the correct premium would have purchased (Correct answer)
- Charge a retroactive penalty premium
- Deny the claim entirely if the error was intentional
Correct answer: Adjust the death benefit to what the correct premium would have purchased
If the insured's age or sex was misstated, the insurer adjusts the death benefit to the amount the actual premiums paid would have purchased at the correct age and sex.
Question 6: Which settlement option pays a fixed dollar amount each period until the policy proceeds and interest are exhausted?
- Interest only option
- Fixed period option
- Fixed amount option (Correct answer)
- Life income option
Correct answer: Fixed amount option
The fixed amount settlement option pays a predetermined dollar amount each period, with payments continuing until the principal and accumulated interest are fully paid out.
Question 7: A long-term care rider attached to a life insurance policy accelerates the death benefit primarily to cover costs associated with:
- Terminal illness hospital stays only
- Chronic illness requiring ongoing assistance with activities of daily living (Correct answer)
- Accidental injuries requiring surgery
- Mental health inpatient treatment
Correct answer: Chronic illness requiring ongoing assistance with activities of daily living
A long-term care rider advances a portion of the death benefit to pay for care when the insured cannot perform a specified number of activities of daily living due to chronic illness.
LLQP Policy Provisions and Riders 4
A life insurance policy's 'entire contract' provision states that the policy document and which other item together form the complete agreement?