#1
Which of the following is a key feature of a term life insurance policy?
Coverage for a specific period
ExplanationTerm life insurance provides coverage for a specific period, usually a set number of years, and does not accumulate cash value.
#2
What does the 'death benefit' refer to in a life insurance policy?
The money the beneficiary receives upon the death of the insured
ExplanationThe death benefit is the amount of money paid to the beneficiary when the insured person dies.
#3
In a life insurance policy, what does 'cash value' refer to?
The amount the policyholder can borrow against the policy
ExplanationCash value is the amount that can be borrowed against the life insurance policy.
#4
Which type of life insurance policy allows the policyholder to adjust the death benefit and premium payments?
Universal life insurance
ExplanationUniversal life insurance provides flexibility, allowing the policyholder to adjust the death benefit and premium payments.
#5
Which type of life insurance policy provides coverage for a specific period and typically does not accumulate cash value?
Term life insurance
ExplanationTerm life insurance provides coverage for a set period without accumulating cash value.
#6
Which type of life insurance policy typically offers both a death benefit and a cash value component?
Whole life insurance
ExplanationWhole life insurance provides a death benefit and accumulates cash value over time.
#7
What does 'underwriting' involve in the context of life insurance?
Assessing the risk and setting premiums
ExplanationUnderwriting in life insurance is the process of evaluating an applicant's risk and determining appropriate premiums.
#8
What is the primary purpose of the 'grace period' in a life insurance policy?
To provide a window for premium payment after the due date without policy lapse
ExplanationThe grace period allows a policyholder to pay premiums after the due date without the risk of policy lapse.
#9
Which of the following factors typically influences the cost of life insurance premiums?
Policyholder's age and health
ExplanationThe cost of life insurance premiums is often influenced by the policyholder's age and health.
#10
What is the primary purpose of the 'suicide clause' in a life insurance policy?
To exclude coverage for death due to suicide
ExplanationThe suicide clause excludes coverage for death resulting from suicide within a specified period.
#11
In a life insurance policy, what is the 'cash surrender value'?
The amount the policyholder receives if they surrender the policy before maturity
ExplanationCash surrender value is the amount the policyholder gets when surrendering the policy before it matures.
#12
What is the main difference between a 'rider' and a 'beneficiary' in a life insurance policy?
A rider is an additional coverage while a beneficiary is the recipient of the death benefit
ExplanationA rider provides additional coverage, whereas a beneficiary receives the death benefit.
#13
What does the 'incontestability clause' in a life insurance policy typically provide?
Protection against fraud after a certain period
ExplanationThe incontestability clause protects the policyholder from fraud-related challenges after a specified period.
#14
What is the main advantage of a 'return of premium' rider in a life insurance policy?
It refunds the premiums paid if the insured outlives the policy term
ExplanationThe return of premium rider refunds all premiums if the insured survives the policy term.
#15
In a life insurance policy, what does the 'exclusion rider' typically specify?
The specific perils or conditions not covered by the policy
ExplanationAn exclusion rider specifies perils or conditions that are not covered by the life insurance policy.