Life and Health California Exam Life Insurance Policy Provisions and Riders

Question 1

The 'incontestability clause' in a life insurance policy means that after 2 years:

Accepted Answer

The insurer cannot contest the validity of the policy except for fraud

Answer

The insurer can never raise the premium

Answer

The insured cannot change the beneficiary

Answer

The policy automatically becomes paid-up

Question 2

Which life insurance policy provision allows a lapsed policy to be reinstated within a specified period?

Accepted Answer

Reinstatement provision

Answer

Grace period

Answer

Extended term provision

Answer

Waiver of premium

Question 3

The 'spendthrift clause' in a life insurance policy protects the beneficiary's proceeds from:

Accepted Answer

The beneficiary's creditors before and after death of the insured

Answer

Estate taxes upon the insured's death

Answer

Probate if the beneficiary is also the policyowner

Answer

State income taxes on death benefits

Question 4

Under the 'misstatement of age or sex' provision in a life insurance policy, if the insured overstated their age:

Accepted Answer

The death benefit is adjusted to the amount the premium would have purchased at the correct age

Answer

The policy is voided

Answer

A refund of excess premiums is issued

Answer

No adjustment is made after the incontestable period

Question 5

What is the purpose of the 'automatic premium loan' provision in a whole life insurance policy?

Accepted Answer

It uses available cash value to automatically pay a premium if the policyowner fails to pay it

Answer

It automatically reduces the death benefit to pay overdue premiums

Answer

It increases the face amount each year by borrowing against policy reserves

Answer

It converts term riders into paid-up insurance automatically

Question 6

Under California law, the grace period for life insurance premiums is:

Accepted Answer

30 days

Answer

7 days

Answer

10 days

Answer

60 days