DC DC Life Insurance 1 — Questions and Answers
Question 1: In the District of Columbia, what is the free-look period for a newly issued life insurance policy?
- 10 days (Correct answer)
- 20 days
- 30 days
- 5 days
Correct answer: 10 days
DC requires a minimum 10-day free-look period during which a policyholder may return a new life insurance policy for a full premium refund.
Question 2: Which of the following best describes a term life insurance policy sold in DC?
- Provides permanent coverage with a cash value component
- Provides coverage for a specified period with no cash value (Correct answer)
- Pays dividends to policyholders annually
- Accumulates tax-free savings for retirement
Correct answer: Provides coverage for a specified period with no cash value
Term life insurance provides death benefit coverage for a defined period and does not accumulate cash value.
Question 3: Under DC law, the incontestability clause in a life insurance policy limits the insurer's right to contest the policy after how long?
- 1 year from issue
- 2 years from issue (Correct answer)
- 5 years from issue
- 6 months from issue
Correct answer: 2 years from issue
DC follows the standard that life insurers may not contest a policy after it has been in force for two years, except for fraud.
Question 4: A DC life insurance applicant intentionally misrepresents a material fact on the application. What is the likely consequence?
- The policy premium is increased
- The insurer may void the policy for material misrepresentation (Correct answer)
- The insurer must honor the claim regardless
- The policy is automatically converted to term
Correct answer: The insurer may void the policy for material misrepresentation
Material misrepresentation on a life insurance application allows the insurer to rescind the policy, especially within the contestability period.
Question 5: Which of the following is a characteristic of whole life insurance policies available in DC?
- Coverage expires at age 65
- Premiums increase every five years
- Cash value accumulates on a tax-deferred basis (Correct answer)
- Benefits are paid only for accidental death
Correct answer: Cash value accumulates on a tax-deferred basis
Whole life insurance builds cash value over time, and that growth is tax-deferred until withdrawn.
Question 6: In DC, if a life insurance policyholder dies during the grace period without having paid the overdue premium, how is the claim typically handled?
- The claim is denied entirely
- The claim is paid but the unpaid premium is deducted from the death benefit (Correct answer)
- The claim is paid in full with no deductions
- The policy is automatically reinstated before paying
Correct answer: The claim is paid but the unpaid premium is deducted from the death benefit
During the grace period the policy remains in force, so the death benefit is paid minus any outstanding premium owed.
DC DC Life Insurance 1
In the District of Columbia, what is the free-look period for a newly issued life insurance policy?