DC DC Life Insurance 2 — Questions and Answers
Question 1: Which DC life insurance policy provision requires the insurer to continue coverage for a limited time after a premium is missed?
- Reinstatement clause
- Grace period provision (Correct answer)
- Incontestability clause
- Suicide exclusion
Correct answer: Grace period provision
The grace period provision, typically 30 days in DC, keeps a life policy in force after a missed premium payment.
Question 2: A DC life insurance policy's cash surrender value is best described as:
- The total premiums paid over the policy's life
- The amount payable to the insurer if the policy lapses
- The amount the policyholder receives upon voluntarily terminating the policy (Correct answer)
- The face amount paid to the beneficiary at death
Correct answer: The amount the policyholder receives upon voluntarily terminating the policy
Cash surrender value is the amount the insurer pays the policyholder if they cancel a permanent life insurance policy.
Question 3: Under DC regulations, who has the right to change the beneficiary of a life insurance policy if no irrevocable beneficiary has been named?
- Only the beneficiary
- The insurer at its discretion
- The policyowner (Correct answer)
- The DC Insurance Commissioner
Correct answer: The policyowner
The policyowner retains the right to change a revocable beneficiary designation at any time.
Question 4: What does the DC nonforfeiture law require for permanent life insurance policies?
- Policies must include a suicide exclusion
- Insurers must offer extended term or reduced paid-up options when a policy lapses (Correct answer)
- Premiums must be fixed for the policy's entire duration
- Policies must be renewable until age 100
Correct answer: Insurers must offer extended term or reduced paid-up options when a policy lapses
DC nonforfeiture laws require that permanent life policies provide at least one nonforfeiture option such as extended term or reduced paid-up insurance when they lapse.
Question 5: A DC universal life insurance policy allows the policyowner to do which of the following?
- Adjust the death benefit and premium payments within certain limits (Correct answer)
- Only increase the death benefit, never decrease it
- Convert to a term policy at any time at no cost
- Transfer ownership to a family member tax-free
Correct answer: Adjust the death benefit and premium payments within certain limits
Universal life insurance offers flexible premiums and adjustable death benefits within policy guidelines.
Question 6: In DC, the standard suicide exclusion clause in a life insurance policy typically excludes coverage for suicide occurring within how many years of policy issue?
- 6 months
- 1 year
- 2 years (Correct answer)
- 5 years
Correct answer: 2 years
Most DC life insurance policies exclude suicide as a covered cause of death for the first two years the policy is in force.
DC DC Life Insurance 2
Which DC life insurance policy provision requires the insurer to continue coverage for a limited time after a premium is missed?