Life & Health Insurance Practice Test
Insurance Life Policy Provisions, Options & Riders Practice Questions
Life Policy Provisions, Options & Riders makes up 8 of every 50 questions on a Tigertest Insurance practice test. Here are 10 of the 32 questions on it, each with the answer and the reason.
Updated by the Tigertest team. General portion only, on the NAIC model and standard prelicensing texts. Your state portion is separate.
1. Months after issue, an insurer wants to rely on a statement the applicant made in a separate letter that was never attached to the policy. Under the entire contract provision:
- A.The letter becomes part of the policy automatically
- B.The letter cannot be used against the insured
- C.The letter controls if it conflicts with the policy
- D.The letter may be used during the contestable period
Answer: B. The entire contract provision says the policy plus the attached application is the whole agreement, so unattached statements cannot be used. Timing within the contestable period does not change that; only attached documents count.
2. Which part of a life insurance policy contains the insurer's basic promise to pay the death benefit to the beneficiary?
- A.Owner's rights provision
- B.Consideration clause
- C.Entire contract provision
- D.Insuring clause
Answer: D. The insuring clause is the insurer's promise to pay and usually appears on the policy face. The consideration clause instead covers what the applicant gives in exchange: the application and the premium.
3. Maria owns and pays for a life policy on her adult son, who is the insured. Who may change the beneficiary or take a policy loan?
- A.Maria, as the policyowner
- B.Maria and her son jointly
- C.Her son, as the insured
- D.The current primary beneficiary
Answer: A. Ownership rights such as naming beneficiaries, borrowing and assigning belong to the policyowner, not the insured. The insured's consent is needed at application, but not to exercise later ownership rights.
4. A $100,000 policy has a $1,200 annual premium due March 1 that goes unpaid. The insured dies March 20. The insurer will pay:
- A.$100,000
- B.Nothing, because the policy lapsed
- C.$98,800
- D.A refund of premiums paid
Answer: C. The death occurred within the 30 or 31-day grace period, so the policy was still in force. The insurer pays the face amount minus the overdue premium: $100,000 - $1,200 = $98,800, not the full $100,000.
5. A whole life policy lapsed for nonpayment 14 months ago, and the owner now asks to reinstate it. The insurer will typically require:
- A.A new application priced at the original age
- B.Repayment of the full cash value
- C.Insurability evidence and back premiums with interest
- D.Only the missed premium, with no proof of health required
Answer: C. Reinstatement, usually allowed within about three years of lapse, requires evidence of insurability and payment of overdue premiums with interest. Paying only the missed premium is not enough, and a surrendered policy cannot be reinstated at all.
6. An insured with a $250,000 whole life policy owes a $20,000 policy loan plus $1,000 of accrued interest when he dies. The beneficiary receives:
- A.$229,000
- B.$250,000, since loans do not reduce it
- C.$230,000
- D.$271,000
Answer: A. Unpaid loans and interest are deducted from the death benefit: $250,000 - $20,000 - $1,000 = $229,000. Forgetting the accrued interest gives the tempting but wrong $230,000.
7. A policyowner misses a premium and the grace period ends. Her whole life policy has enough cash value and an automatic premium loan provision. What happens?
- A.The policy converts to extended term
- B.The policy lapses and must be reinstated
- C.The policy becomes reduced paid-up insurance
- D.The premium is borrowed from the cash value
Answer: D. The automatic premium loan provision pays the overdue premium as a loan against the cash value, keeping the policy in force. Extended term would apply only if there were no APL provision and no option chosen.
8. Three years after issue, an insured dies, and the insurer discovers he concealed a heart condition on the application. Premiums were paid. The insurer:
- A.May reduce the benefit by half
- B.Must pay the death benefit
- C.May deny the claim for concealment
- D.May refund premiums instead of paying
Answer: B. After the two-year incontestable period, the insurer cannot contest for misrepresentation or concealment. The exceptions are nonpayment of premium and, in some cases, impersonation or lack of insurable interest, none of which applies here.
9. An insured dies with a $100,000 policy. He paid $20 per $1,000, but the correct premium for his true age was $25 per $1,000. The insurer pays:
- A.$75,000
- B.$80,000
- C.$100,000
- D.$125,000
Answer: B. Under misstatement of age, the benefit is adjusted to what the premium paid would have bought: $2,000 paid / $25 per $1,000 = 80 units, or $80,000. The contract is not voided, and the full face is not paid.
10. A policy excludes war, private piloting and suicide within two years. Which death, occurring three years after issue, is covered?
- A.Death in a declared war
- B.Crash while piloting a private plane
- C.Death in combat military service
- D.Suicide
Answer: D. The suicide clause applies only during the first two years (during which premiums are refunded), so a suicide in year three is covered. War and private aviation exclusions remain in effect for the life of the policy.
Practice all 32 life policy provisions, options & riders questions, and the rest of the 200-question bank, in the free Insurance training sets. Questions you miss come back until you have mastered them.
Start practicingFree to start. No account needed.