I85PREP
⌘ K
NJ Life & Health study materials
NJ Life & Health study resources

NJ Life & Health practice questions

One question at a time. Build your NJ Life & Health understanding.

First 50 of 200 questions. Each one lists the choices, the correct answer, and an explanation. The checker at the top of this page saves progress in this browser when it is available.

Continue in the practice tool above to load more questions, 50 at a time.

Question 1Life Insurance Basics

Which statement best describes the primary financial purpose of individual life insurance?

  1. To protect the insurer against adverse mortality experience
  2. To fund the state guaranty association reserve pool
  3. To provide a guaranteed retirement income for the policyowner
  4. To replace lost income and cover obligations after a death Correct answer.

Explanation

Life insurance is designed to protect beneficiaries against the financial loss caused by the insured's premature death. It creates an estate or replaces income rather than providing retirement income or funding insurer reserves.

Question 2Life Insurance Basics

Which element must be present for a life insurance policy to be a legally enforceable contract?

  1. A medical examination completed before issue
  2. A signed agent's report
  3. Approval by the state insurance department
  4. A lawful purpose for the agreement Correct answer.

Explanation

A valid contract requires offer, acceptance, consideration, and a legal purpose. A medical exam or agent report may support underwriting but is not a contract element, and department approval is not required for each policy.

Question 3Life Insurance Basics

Insurable interest in a life insurance applicant must exist at which point?

  1. Only if the policy is later assigned
  2. Only when a claim is filed
  3. Continuously for the entire life of the policy
  4. At the time the policy is applied for and issued Correct answer.

Explanation

Insurable interest must exist when the contract is formed; it need not continue afterward. This rule prevents the use of life insurance as a wagering contract.

Question 4Life Insurance Basics

A life insurance contract is aleatory because:

  1. The benefits exchanged are unequal and uncertain Correct answer.
  2. Its terms are drafted by the insurer
  3. Both parties exchange equal value at the same time
  4. Only the insurer is bound to perform

Explanation

An aleatory contract depends on an uncertain event, and the values exchanged may be very unequal, as when a small premium leads to a large death benefit. Equal exchange describes a commutative contract, and drafting by one party describes adhesion.

Question 5Life Insurance Basics

A life insurance policy is considered a unilateral contract because:

  1. The policyowner may cancel at any time without penalty
  2. The insured must submit to medical underwriting before coverage begins
  3. The applicant and insurer negotiate each policy term jointly
  4. Only the insurer is legally bound to keep its promise Correct answer.

Explanation

Only the insurer makes an enforceable promise to pay the death benefit; the policyowner's premium payments are consideration but are not a legal obligation to continue paying. Negotiated terms describe a bilateral contract.

Question 6Life Insurance Basics

Because a life insurance policy is a contract of adhesion:

  1. Courts must enforce every policy term exactly as written regardless of ambiguity
  2. Ambiguities are interpreted in favor of the policyowner, who did not draft it Correct answer.
  3. Ambiguities are interpreted in favor of the insurer that drafted the policy
  4. The insured may rewrite unclear provisions when a claim is submitted

Explanation

The insurer drafts the policy and the applicant accepts it as written, so ambiguous language is construed against the drafter and in favor of the policyowner. The insured cannot rewrite terms after the fact, and ambiguity is not ignored.

Question 7Life Insurance Basics

The principle of utmost good faith requires the applicant to:

  1. Name the same beneficiary as the applicant's spouse
  2. Pay the first premium before the policy can be delivered
  3. Verify the agent's license with the Department of Banking and Insurance
  4. Disclose all material facts the insurer needs to evaluate the risk Correct answer.

Explanation

Both parties must deal honestly, and the applicant must disclose material information that affects the insurer's decision to issue coverage. Premium timing, beneficiary choice, and license verification are separate matters.

Question 8Life Insurance Basics

Which factor in a life insurance premium reflects the insurer's expected death claims?

  1. The interest assumption
  2. The expense loading
  3. The policy fee
  4. The mortality assumption Correct answer.

Explanation

The mortality assumption estimates the cost of death claims based on expected mortality for the insured's risk class. Interest and expense assumptions address investment earnings and operating costs.

Question 9Life Insurance Basics

Underwriting exists primarily to guard against which problem?

  1. Adverse selection Correct answer.
  2. Rebating
  3. Twisting
  4. Churning

Explanation

Adverse selection is the tendency of applicants at higher risk to seek insurance more actively than those at lower risk. Underwriting classifies risk and sets premiums accordingly.

Question 10Life Insurance Basics

An applicant completes a life application, pays the initial premium, and receives a conditional receipt. In this transaction, the applicant's actions generally constitute:

  1. A counteroffer that the underwriter may reject without any notice to the applicant
  2. An acceptance of the insurer's offer
  3. The offer that the insurer accepts by issuing the policy Correct answer.
  4. A binding contract that the insurer may not decline

Explanation

The completed application and premium are treated as the applicant's offer; the insurer accepts by approving and issuing the policy. A conditional receipt may provide temporary coverage if conditions are met, but the insurer retains underwriting discretion.

Question 11Life Insurance Basics

A life insurance policy is conditional because the insurer's obligation to pay the death benefit depends on:

  1. The policy being in force and its conditions met Correct answer.
  2. The insurer earning a profit on the policy
  3. The beneficiary surviving the insured by at least 30 days
  4. The policyowner's continued employment

Explanation

The insurer's promise is conditioned on the policy remaining in force, premiums being paid, and other stated conditions being satisfied at the time of loss. Employment and insurer profitability are not conditions of coverage.

Question 12Life Insurance Basics

An insurer knowingly accepts premiums for two years after learning that the insured misstated a material fact on the application. The insurer may later be barred from denying coverage under the doctrine of:

  1. Indemnity
  2. Subrogation
  3. Consideration
  4. Waiver and estoppel Correct answer.

Explanation

By continuing to accept premiums with knowledge of the misstatement, the insurer waives its right to rescind and may be estopped from denying coverage. Subrogation and indemnity concern recovery and reimbursement, not forfeiture of a policy defense.

Question 13Life Insurance Basics

The parol evidence rule generally means that:

  1. The insurer must record all telephone conversations with applicants
  2. Verbal statements by the agent override the written policy
  3. A written policy cannot be altered by earlier oral agreements Correct answer.
  4. The policy must be read to the applicant before signing

Explanation

When the parties have reduced their agreement to a complete written contract, prior oral statements generally cannot change it. This supports the integrity of the written policy.

Question 14Life Insurance Basics

Which situation is most likely to be considered stranger-originated life insurance (STOLI)?

  1. A parent insures a minor child to fund future education
  2. An employer insures a key employee whose loss would harm the business
  3. Spouses insure each other to cover a mortgage
  4. An investor with no insurable interest buys a policy for resale Correct answer.

Explanation

STOLI involves a third party without insurable interest procuring or funding a policy primarily for resale in the secondary market. Legitimate business, family, and spousal coverage rests on insurable interest.

Question 15Life Insurance Basics

A policyowner can pay an annual premium of $1,200 or monthly premiums of $110. Compared with annual payment, the monthly mode will:

  1. Eliminate the insurer's expense loading
  2. Have no effect on the total amount paid
  3. Lower the total amount paid each year
  4. Increase the total amount paid each year Correct answer.

Explanation

More frequent premium modes increase administrative costs and loss of interest to the insurer, so the total annual outlay is higher. Monthly payments of $110 total $1,320 per year versus $1,200 annually.

Question 16Life Insurance Basics

Which right belongs to the owner of a life insurance policy rather than to the insured or beneficiary?

  1. The right to require the insurer to pay a claim within 30 days
  2. The right to name and change the beneficiary Correct answer.
  3. The right to submit evidence of insurability at claim time
  4. The right to receive the death benefit

Explanation

The policyowner controls ownership rights, including beneficiary designation, assignment, surrender, and loans. The beneficiary receives the death benefit, while claim payment timing is set by policy and law.

Question 17Life Insurance Basics

Under the paid-up additions dividend option, each dividend is used to:

  1. Buy one-year term coverage equal to the cash value
  2. Accumulate at interest that the insurer credits to the policy
  3. Reduce the next premium payment dollar for dollar
  4. Purchase additional permanent coverage with no further premium due Correct answer.

Explanation

Paid-up additions buy small amounts of additional permanent insurance at the insured's attained age, and no further premiums are required on those additions. Premium reduction and accumulation at interest are separate dividend options.

Question 18Life Insurance Basics

Which nonforfeiture option provides a reduced paid-up policy with a face amount lower than the original?

  1. Reduced paid-up insurance Correct answer.
  2. Cash surrender
  3. Automatic premium loan
  4. Extended term insurance

Explanation

Reduced paid-up insurance uses the net cash value to buy a smaller permanent policy with no further premiums. Extended term keeps the original face amount for a limited period.

Question 19Life Insurance Basics

An applicant fails to disclose a diagnosed heart condition. For the insurer to rescind the policy during the contestable period, the misstatement must be:

  1. Reported to the state insurance department first
  2. Material to the underwriting decision Correct answer.
  3. Discovered only after the insured's death
  4. Written in the agent's own handwriting

Explanation

A misrepresentation must be material, meaning it would have affected the insurer's decision to issue coverage or the premium charged. Who wrote the answer or when the error is discovered does not by itself determine rescission.

Question 20Life Insurance Basics

A producer collects the initial premium from an applicant and deposits it in a personal account for three weeks. This conduct most directly violates the producer's:

  1. Continuing education requirement
  2. Fiduciary duty to the insurer and applicant Correct answer.
  3. Appointment renewal deadline
  4. Errors and omissions deductible

Explanation

Premiums collected on the insurer's behalf must be handled in a fiduciary capacity and not commingled with personal funds. The other items concern licensing and professional administration, not the handling of trust funds.

Question 21Life Insurance Basics

Under the McCarran-Ferguson Act, regulation of the business of insurance is primarily:

  1. Handled by the U.S. Treasury
  2. Delegated to the NAIC, a federal agency
  3. Preempted by federal law
  4. Left to the states Correct answer.

Explanation

McCarran-Ferguson reserves regulation of the business of insurance to the states unless Congress specifically provides otherwise. The NAIC is a voluntary association of state regulators, not a federal agency.

Question 22Life Insurance Basics

An insurer's written manual gives a producer authority to collect initial premiums, but the producer also routinely binds coverage without that authority. A client who relied on the producer's apparent ability to bind coverage may be protected by:

  1. Statutory authority
  2. Express authority
  3. Implied authority
  4. Apparent authority Correct answer.

Explanation

Apparent authority arises when the insurer's conduct leads a reasonable third party to believe the producer has authority, even if the written grant does not include it. Express authority is what the insurer actually grants, and implied authority covers customary acts needed to exercise express powers.

Question 23Life Insurance Basics

An applicant intentionally conceals a terminal illness during underwriting. If the insurer would have declined the application had it known, the insurer may:

  1. Rescind the policy and deny the claim Correct answer.
  2. Pay the claim and then recover from the beneficiary's estate
  3. Increase the premium but still pay the full face amount
  4. Reduce the death benefit to premiums paid plus interest

Explanation

Intentional concealment of a material fact is fraud, which can justify rescission and denial of the claim during the contestable period. A mere premium adjustment would not remedy fraud that induced the contract.

Question 24Life Insurance Basics

In setting a life insurance premium, a higher assumed interest rate generally results in:

  1. A higher reserve requirement at the time of issue
  2. No change, since interest is not a premium rating factor
  3. A lower gross premium Correct answer.
  4. A higher gross premium because the insurer earns more

Explanation

The interest assumption reduces the premium because the insurer expects to earn more on reserves. Mortality and expense assumptions also affect the gross premium, but a higher interest assumption lowers the amount needed from the policyowner.

Question 25Life Insurance Basics

An applicant states in the application that she has never used tobacco, when in fact she smokes occasionally. In insurance law, this statement is generally treated as:

  1. A representation Correct answer.
  2. An estoppel binding on the applicant
  3. A waiver of the insurer's right to underwrite
  4. A warranty that voids the policy automatically if untrue

Explanation

Statements in an application are generally representations, meaning they are believed true to the best of the applicant's knowledge. They are not warranties that automatically void coverage, though a material misrepresentation may allow rescission.

Question 26Life Insurance Basics

A life insurance contract is described as aleatory because:

  1. each party makes promises of equal value at the time of contracting
  2. the dollar amounts exchanged by the parties are unequal and depend on an uncertain event Correct answer.
  3. only the insurer is legally bound to perform under the contract
  4. the terms are drafted by the insurer and offered on a take-it-or-leave-it basis

Explanation

An aleatory contract is one in which the performance of the parties is unequal and contingent on an uncertain event. In life insurance, a small premium can result in a large death benefit, or no benefit at all, depending on when the insured dies.

Question 27Life Insurance Basics

Which of the following is the consideration furnished by the insurer in a life insurance contract?

  1. its promise to pay the stated death benefit upon a covered death Correct answer.
  2. the premium paid by the policyowner
  3. the signed application submitted by the applicant
  4. the dividends declared on participating policies

Explanation

Consideration is what each party gives up to make the contract binding. The insurer's consideration is its promise to pay the death benefit, while the applicant's consideration is the premium plus the statements in the application.

Question 28Life Insurance Basics

In a personally owned life insurance policy, insurable interest must exist:

  1. at both the time of application and the time of death
  2. at the time of the insured's death
  3. at no time, because a policyowner is automatically presumed to have an interest
  4. at the time the policy is applied for and issued Correct answer.

Explanation

For life insurance, insurable interest must be present when the contract is formed, and it may later disappear without invalidating the policy. Requiring the interest to continue until death is a rule associated with property insurance.

Question 29Life Insurance Basics

A life insurance policy is classified as a unilateral contract because:

  1. the policy must be approved by the state insurance department before delivery
  2. only the insurer makes an enforceable promise, while the owner is never obligated to keep paying premiums Correct answer.
  3. the insurer may change the premium unilaterally at any time
  4. both the owner and the insurer must perform their promises simultaneously

Explanation

In a unilateral contract only one party is legally bound. The insurer must pay if a covered loss occurs, but the policyowner may stop paying premiums at any time and let the policy lapse or take a nonforfeiture benefit.

Question 30Life Insurance Basics

The entire contract provision in a life insurance policy provides that:

  1. the insurer must deliver the policy within a fixed number of days after approval
  2. the application is not part of the contract unless the insurer mails a copy to the owner
  3. the policyowner may change any policy provision by written agreement with the insurer
  4. the policy and a copy of the application together make up the whole agreement, and no other documents are incorporated by reference Correct answer.

Explanation

The entire contract provision states that the policy and any attached copy of the application constitute the complete agreement between the parties. This prevents the insurer from relying on outside documents or side statements that are not part of the policy.

Question 31Life Insurance Basics

A stock life insurer issues a class of policies that do not share in the company's divisible surplus. These policies are best described as:

  1. fraternal policies
  2. assessable policies
  3. participating policies
  4. nonparticipating policies Correct answer.

Explanation

Nonparticipating policies do not pay dividends and therefore do not share in the insurer's divisible surplus. Participating policies, commonly issued by mutual insurers, do share in the surplus through dividends.

Question 32Life Insurance Basics

The portion of a life insurance premium that covers commissions, taxes, and administrative costs is known as the:

  1. cash value element
  2. net single premium
  3. expense loading Correct answer.
  4. mortality charge

Explanation

A gross premium is built from the mortality charge, interest assumptions, and an expense loading that covers operating costs such as commissions, taxes, and administration. The expense loading is what converts the net premium into the gross premium the owner actually pays.

Question 33Life Insurance Basics

An insurer reinstates an individual life policy that lapsed eight months earlier after the owner pays the required back premiums and provides evidence of insurability. Which statement about the reinstated coverage is correct?

  1. The insurer may not contest any statement made in the reinstatement application
  2. The original contestability period continues to run from the original issue date without interruption
  3. A new contestability period generally begins on the reinstatement date for statements made in the reinstatement application Correct answer.
  4. The suicide exclusion continues to be measured from the original issue date and is unaffected

Explanation

Reinstatement restores the policy as of the reinstatement date, and the insurer generally receives a fresh contestability period running from that date for statements made in the reinstatement application. The suicide exclusion likewise typically restarts, and any outstanding policy loan must be repaid or reinstated.

Question 34Life Insurance Basics

A lender requires a borrower to purchase a life insurance policy naming the lender as beneficiary to secure a business loan. The lender's insurable interest is:

  1. limited to the total premiums the borrower can reasonably afford
  2. equal to the full face amount the borrower chooses to purchase
  3. unlimited, because the borrower signed a written consent
  4. limited to the amount of the outstanding loan balance Correct answer.

Explanation

A creditor has an insurable interest in a debtor's life only to the extent of the economic exposure, meaning the outstanding debt. Coverage beyond that amount would amount to a wagering contract on the debtor's life.

Question 35Life Insurance Policies, Provisions, Options and Riders

An applicant receives a newly issued life insurance policy. Under the entire contract provision, which documents make up the contract between the insurer and the owner?

  1. The policy plus the agent's written sales illustrations
  2. The policy and the attached copy of the application Correct answer.
  3. The policy alone; the application stays in the home office file
  4. The policy plus any separate bylaws of the insurer

Explanation

The entire contract provision states that the policy and the copy of the application attached to it constitute the whole contract. Nothing may be incorporated into the agreement by reference, and no one, including the agent, may modify the contract unless the change appears in writing in the policy.

Question 36Life Insurance Policies, Provisions, Options and Riders

Marta's annual premium is due March 1 but she does not pay it. Her policy contains the standard grace period. What is true while the grace period runs?

  1. The death benefit is reduced by the amount of the unpaid premium
  2. The policy automatically converts to extended term insurance
  3. Coverage is suspended until the overdue premium is received
  4. The policy stays in force and the overdue premium may still be paid Correct answer.

Explanation

The grace period allows the owner extra time, typically 30 or 31 days, to pay an overdue premium while the policy remains fully in force. If the insured dies during that window, the insurer pays the proceeds and deducts the unpaid premium.

Question 37Life Insurance Policies, Provisions, Options and Riders

A newly delivered individual life policy contains a free look provision. What right does this give the policy owner?

  1. The right to exchange the policy for any other policy the insurer sells
  2. The right to return the policy for a full refund within a set period Correct answer.
  3. The right to reinstate the policy after it has lapsed for nonpayment
  4. The right to skip the first premium payment without any penalty

Explanation

The free look provision lets the owner cancel a delivered policy within a stated period, commonly 10 to 30 days, and receive a full refund of premiums paid. The policy is treated as though it was never issued.

Question 38Life Insurance Policies, Provisions, Options and Riders

A policy lapses because premiums were not paid. Which combination does the reinstatement provision typically require the owner to provide?

  1. Proof of insurability and overdue premiums with interest Correct answer.
  2. Written consent from both the owner and the beneficiary
  3. Payment of the current premium only
  4. Submission of a new application and a new contestability period

Explanation

Reinstatement generally requires a written request, evidence of insurability, and payment of all overdue premiums plus interest, along with repayment or reinstatement of any policy loan. Most policies allow reinstatement within three years of lapse, though some states permit up to five.

Question 39Life Insurance Policies, Provisions, Options and Riders

After a life policy has been in force for two years during the insured's lifetime, the insurer is generally barred from contesting the policy on which of the following grounds?

  1. Nonpayment of premium by the owner
  2. Fraudulent claim submitted by the beneficiary
  3. A change in the insured's occupation after issue
  4. Misrepresentation of a material fact on the application Correct answer.

Explanation

The incontestability provision prevents the insurer from denying a claim based on statements made in the application after the policy has been in force for the contestable period, usually two years. Two defenses survive: nonpayment of premium and fraud in the procurement of the policy in some jurisdictions, and claim fraud is always actionable.

Question 40Life Insurance Policies, Provisions, Options and Riders

After the insured dies, the insurer discovers that the insured's age was understated on the application. What does the misstatement of age provision require?

  1. The owner must pay the premium difference plus interest within 30 days
  2. The death benefit is adjusted to what the premium would have bought Correct answer.
  3. The face amount remains unchanged but future dividends are reduced
  4. The policy is voided and all premiums paid are refunded to the owner

Explanation

Under the misstatement of age provision, the insurer adjusts the amount payable to what the premium actually paid would have purchased at the insured's correct age. The policy is not voided, and no additional premium is collected after death.

Question 41Life Insurance Policies, Provisions, Options and Riders

An insured dies by suicide 18 months after issue, and the policy contains a two-year suicide clause. What does the insurer pay?

  1. The face amount less any outstanding policy loan
  2. The full face amount, because the beneficiary did not cause the death
  3. Nothing, because suicide is excluded under every life policy
  4. A refund of the premiums paid, and the contract is void Correct answer.

Explanation

The suicide clause limits the insurer's liability to a return of premiums paid if the insured dies by suicide within the stated period, usually two years from issue. Because the death occurred inside that window, the face amount is not payable.

Question 42Life Insurance Policies, Provisions, Options and Riders

A policy includes an automatic premium loan provision. What does this provision do?

  1. Pays the premium from accumulated dividends first
  2. Waives the premium when the insured becomes disabled
  3. Converts the policy to extended term insurance on lapse
  4. Uses cash value to pay an unpaid premium before lapse Correct answer.

Explanation

The automatic premium loan provision authorizes the insurer to borrow from the policy's cash value to pay a premium that is still unpaid at the end of the grace period. This keeps the policy in force, with the loan and interest reducing the cash value and any proceeds.

Question 43Life Insurance Policies, Provisions, Options and Riders

An owner with a cash value policy stops paying premiums and elects the extended term nonforfeiture option. What does the owner receive?

  1. The original face amount payable at the original maturity date
  2. A reduced face amount of permanent coverage paid up for life
  3. The cash value refunded in equal installments over ten years
  4. Term coverage for the full face amount for a limited period Correct answer.

Explanation

Extended term uses the net cash value as a single premium to buy term insurance equal to the original face amount for as long as that value will pay for. No further premiums are due, and coverage ends when the term period expires.

Question 44Life Insurance Policies, Provisions, Options and Riders

Which statement correctly describes the reduced paid-up nonforfeiture option?

  1. It returns the cash value in monthly installments to the owner
  2. It continues the original policy while borrowing the cash value
  3. It keeps the original face amount but shortens the coverage period
  4. It provides a smaller paid-up policy that stays in force for life Correct answer.

Explanation

Reduced paid-up applies the net cash value as a single premium to purchase a lower face amount of permanent insurance that requires no further premiums. Coverage continues for the insured's lifetime and builds its own cash value.

Question 45Life Insurance Policies, Provisions, Options and Riders

An owner borrows against the cash value of a life policy and never repays the loan. What happens at the insured's death?

  1. Only the interest that has accrued is deducted from the proceeds
  2. The unpaid loan and accrued interest are deducted from the proceeds Correct answer.
  3. The loan is forgiven and the full face amount is paid to the beneficiary
  4. The beneficiary must repay the loan before proceeds are released

Explanation

A policy loan is a debt owed to the insurer, secured by the cash value. At death the outstanding loan balance plus accrued interest is subtracted from the death benefit, and the beneficiary receives the difference.

Question 46Life Insurance Policies, Provisions, Options and Riders

An owner elects the paid-up additions dividend option. What is the result of this election?

  1. Dividends are paid to the owner in cash each policy year
  2. Dividends are used to reduce the next premium that is due
  3. Each dividend buys a small amount of additional permanent coverage Correct answer.
  4. Dividends accumulate at interest and are paid at death or surrender

Explanation

With paid-up additions, each dividend is treated as a single premium that purchases a small amount of additional permanent insurance at the insured's attained age. The additions carry their own cash value and are added to the death benefit.

Question 47Life Insurance Policies, Provisions, Options and Riders

A beneficiary chooses a life income with a 10-year period certain settlement option. What does this arrangement guarantee?

  1. Payments for ten years regardless of how long the beneficiary lives
  2. Payments that stop at the beneficiary's death with nothing further due
  3. Payments for exactly ten years, then the principal is paid out
  4. Payments for life, with a guaranteed minimum number of payments Correct answer.

Explanation

A period certain guarantees that payments will continue for at least the stated number of years even if the beneficiary dies sooner, with any remainder paid to a contingent payee. If the beneficiary outlives the certain period, payments continue for life.

Question 48Life Insurance Policies, Provisions, Options and Riders

A policy owner names a beneficiary designation that is irrevocable. What does this mean for the owner?

  1. The beneficiary loses all rights if the owner survives the insured
  2. The owner cannot change the beneficiary without that person's consent Correct answer.
  3. The owner may change the beneficiary only by written notice to the insurer
  4. The beneficiary may demand the cash surrender value any time before the insured dies

Explanation

An irrevocable designation gives the named beneficiary a vested interest in the policy. The owner generally cannot change the beneficiary, surrender the policy, take a loan, or assign it without that beneficiary's written consent.

Question 49Life Insurance Policies, Provisions, Options and Riders

A waiver of premium rider is attached to an individual life policy. When does the waiver take effect?

  1. After the insured reaches age 65 and retires from full-time work
  2. After a total disability that lasts beyond the elimination period Correct answer.
  3. Whenever the owner requests it and shows financial hardship
  4. Immediately upon any illness that keeps the insured out of work

Explanation

The waiver of premium rider waives premiums when the insured becomes totally disabled as defined in the rider and the disability continues beyond the elimination period, often six months. Premiums are typically credited retroactively to the start of the disability once the waiting period is satisfied.

Question 50Life Insurance Policies, Provisions, Options and Riders

An insured with an accidental death benefit rider suffers a fatal heart attack while driving, and the car then strikes a tree. What does the insurer pay?

  1. The face amount only, since the heart attack caused the death Correct answer.
  2. Only the accidental death benefit, because the death was cardiac
  3. The face amount plus the accidental benefit, because a crash occurred
  4. Nothing, because the cause of death was not an accident

Explanation

The accidental death benefit pays only when death results directly and independently from accidental bodily injury, usually within a stated period after the accident. Here the proximate cause of death was the heart attack, so only the base policy face amount is payable.