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Life and Health Insurance Producer Exam

Life policy provisions: practice questions

Our Life & Health Insurance bank has 17 questions on this topic. Here are 5 of them with answers; the full mock exam draws from every topic, like the real one.

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Question 1

What is the grace period on a life insurance policy?

  1. A period after the premium due date, usually 30 or 31 days, when coverage stays in force
  2. A period before the first premium is paid when the agent can cancel the policy
  3. A period after a claim is filed during which the insurer may delay payment for any reason
  4. A period during which the owner may change the policy type without proof
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A. A period after the premium due date, usually 30 or 31 days, when coverage stays in force — If the insured dies in the grace period, the unpaid premium is deducted from the benefit.

Question 2

What happens under the misstatement of age provision?

  1. Benefits are adjusted to what the premium paid would have bought at the correct age
  2. The insurer pays the full face amount regardless of the error
  3. The policy is cancelled and all premiums are refunded to the owner, with interest at the current rate
  4. The beneficiary must pay the difference in premiums owed
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A. Benefits are adjusted to what the premium paid would have bought at the correct age — It applies even after the contestable period.

Question 3

What does the common disaster (Uniform Simultaneous Death Act) provision address?

  1. When the insured and the agent die at the same time, the policy is void
  2. When two policies cover the same insured, only one can pay
  3. When the insured and primary beneficiary die at the same time, the insured is presumed to have survived
  4. When the beneficiary dies first, the benefit goes to the state
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C. When the insured and primary beneficiary die at the same time, the insured is presumed to have survived — The benefit then goes to the contingent beneficiary or estate.

Question 4

What does the assignment provision allow?

  1. Assigning the agent's commission to the insured
  2. Changing the insured person named on the policy
  3. Transferring ownership rights, absolutely or as collateral
  4. Reducing the premium if the insured stops smoking for at least twelve months
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C. Transferring ownership rights, absolutely or as collateral — A collateral assignment is common for loans.

Question 5

What does a spendthrift clause do?

  1. Requires the beneficiary to save part of the proceeds
  2. Allows the beneficiary to spend all of the proceeds immediately without restriction
  3. Protects the death proceeds from the beneficiary's creditors
  4. Limits how much premium the owner can pay each year
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C. Protects the death proceeds from the beneficiary's creditors — It applies to proceeds held under a settlement option.

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