Pearson Vue - LIFE INSURANCE POLICY
PROVISIONS, OPTIONS, AND RIDERS Verified
Multiple Choice and Conceptual Actual
Emended Exam Questions With Reviewed 100%
Correct Detailed Answers
Guaranteed Pass!!Current Update
1. Which provision states that the policy and attached application make up the
entire contract?
Answer: Entire Contract Provision
2. True or False: The Incontestability Clause prevents the insurer from voiding
the policy after two years due to misstatements (except for fraud in some
states).
Answer: True
3. Which provision protects the policyowner from having coverage denied due
to late premium payment within a specified time?
Answer: Grace Period
4. True or False: An irrevocable beneficiary designation can be changed
without the beneficiary’s consent.
Answer: False
5. Which rider provides coverage for a child if the payor dies or becomes
disabled?
Answer: Payor Benefit Rider
6. The Guaranteed Insurability Rider allows the insured to:
Answer: Purchase additional coverage without evidence of insurability
,7. True or False: The Waiver of Premium Rider continues coverage if the
insured becomes totally disabled.
Answer: True
8. Which provision ensures coverage continues even if the insured dies during
the grace period?
Answer: Grace Period (benefit reduced by unpaid premium)
9. The Misstatement of Age provision allows the insurer to:
Answer: Adjust the death benefit to what the premium would have
purchased at the correct age
10.True or False: Accidental Death Benefit Riders pay double or triple the face
amount for accidental death.
Answer: True
11.Which type of policy has level premiums, guaranteed death benefit, and
guaranteed cash value?
Answer: Whole Life
12.True or False: Variable Life insurance guarantees both cash value and death
benefit.
Answer: False — only death benefit minimum is guaranteed
13.Universal Life insurance is often described as:
Answer: Flexible premium adjustable life insurance
14.Which of the following determines cash value growth in a Variable Life
policy?
Answer: Performance of the separate account
15.True or False: Policyowners in Universal Life may skip premiums if the cash
value is sufficient.
Answer: True
16.Whole Life cash value typically equals the face amount at what age?
Answer: 100 (or 120 for newer policies)
, 17.Which death benefit option under Universal Life provides a level face
amount with increasing cash value?
Answer: Option A
18.Which death benefit option under Universal Life pays both the face amount
and cash value?
Answer: Option B
19.True or False: Variable Universal Life combines flexible premiums with
investment choices in separate accounts.
Answer: True
20.Which policy type requires a securities license to sell?
Answer: Variable Life or Variable Universal Life
Section 3: Dividends and Nonforfeiture Options (10 Questions)
21.True or False: Dividends are guaranteed in participating Whole Life policies.
Answer: False
22.Dividends are considered:
Answer: A return of premium — not taxable unless they exceed total
premiums paid
23.Which dividend option leaves dividends with the insurer to earn interest
(which is taxable)?
Answer: Accumulation at Interest
24.True or False: Dividends can be used to purchase Paid-Up Additions, which
increase death benefit and cash value.
Answer: True
25.Which nonforfeiture option provides the longest period of coverage?
Answer: Reduced Paid-Up
, 26.The Extended Term option uses the policy’s cash value to:
Answer: Buy term insurance equal to the original face amount for as long as
possible
27.True or False: The Cash Surrender nonforfeiture option ends coverage
permanently.
Answer: True
28.Dividends used to reduce future premiums is called:
Answer: Reduced Premiums Option
29.Which dividend option allows purchase of 1-year term insurance equal to
the policy’s cash value increase?
Answer: One-Year Term Option
30.True or False: Policyowners must select a nonforfeiture option at issue, but
the insurer will choose a default if they don’t.
Answer: True
Section 4: Policy Loans and Grace Periods (10 Questions)
31.Policy loans are available only on:
Answer: Policies with cash value (Whole, Universal, Variable Universal)
32.True or False: A policy loan reduces both the cash value and death benefit if
unpaid.
Answer: True
33.The insurer may delay a policy loan or surrender for up to:
Answer: 6 months
34.True or False: Policy loan interest is tax-deductible.
Answer: False
35.If the insured dies with an outstanding policy loan, the death benefit is:
Answer: Reduced by the loan plus interest
PROVISIONS, OPTIONS, AND RIDERS Verified
Multiple Choice and Conceptual Actual
Emended Exam Questions With Reviewed 100%
Correct Detailed Answers
Guaranteed Pass!!Current Update
1. Which provision states that the policy and attached application make up the
entire contract?
Answer: Entire Contract Provision
2. True or False: The Incontestability Clause prevents the insurer from voiding
the policy after two years due to misstatements (except for fraud in some
states).
Answer: True
3. Which provision protects the policyowner from having coverage denied due
to late premium payment within a specified time?
Answer: Grace Period
4. True or False: An irrevocable beneficiary designation can be changed
without the beneficiary’s consent.
Answer: False
5. Which rider provides coverage for a child if the payor dies or becomes
disabled?
Answer: Payor Benefit Rider
6. The Guaranteed Insurability Rider allows the insured to:
Answer: Purchase additional coverage without evidence of insurability
,7. True or False: The Waiver of Premium Rider continues coverage if the
insured becomes totally disabled.
Answer: True
8. Which provision ensures coverage continues even if the insured dies during
the grace period?
Answer: Grace Period (benefit reduced by unpaid premium)
9. The Misstatement of Age provision allows the insurer to:
Answer: Adjust the death benefit to what the premium would have
purchased at the correct age
10.True or False: Accidental Death Benefit Riders pay double or triple the face
amount for accidental death.
Answer: True
11.Which type of policy has level premiums, guaranteed death benefit, and
guaranteed cash value?
Answer: Whole Life
12.True or False: Variable Life insurance guarantees both cash value and death
benefit.
Answer: False — only death benefit minimum is guaranteed
13.Universal Life insurance is often described as:
Answer: Flexible premium adjustable life insurance
14.Which of the following determines cash value growth in a Variable Life
policy?
Answer: Performance of the separate account
15.True or False: Policyowners in Universal Life may skip premiums if the cash
value is sufficient.
Answer: True
16.Whole Life cash value typically equals the face amount at what age?
Answer: 100 (or 120 for newer policies)
, 17.Which death benefit option under Universal Life provides a level face
amount with increasing cash value?
Answer: Option A
18.Which death benefit option under Universal Life pays both the face amount
and cash value?
Answer: Option B
19.True or False: Variable Universal Life combines flexible premiums with
investment choices in separate accounts.
Answer: True
20.Which policy type requires a securities license to sell?
Answer: Variable Life or Variable Universal Life
Section 3: Dividends and Nonforfeiture Options (10 Questions)
21.True or False: Dividends are guaranteed in participating Whole Life policies.
Answer: False
22.Dividends are considered:
Answer: A return of premium — not taxable unless they exceed total
premiums paid
23.Which dividend option leaves dividends with the insurer to earn interest
(which is taxable)?
Answer: Accumulation at Interest
24.True or False: Dividends can be used to purchase Paid-Up Additions, which
increase death benefit and cash value.
Answer: True
25.Which nonforfeiture option provides the longest period of coverage?
Answer: Reduced Paid-Up
, 26.The Extended Term option uses the policy’s cash value to:
Answer: Buy term insurance equal to the original face amount for as long as
possible
27.True or False: The Cash Surrender nonforfeiture option ends coverage
permanently.
Answer: True
28.Dividends used to reduce future premiums is called:
Answer: Reduced Premiums Option
29.Which dividend option allows purchase of 1-year term insurance equal to
the policy’s cash value increase?
Answer: One-Year Term Option
30.True or False: Policyowners must select a nonforfeiture option at issue, but
the insurer will choose a default if they don’t.
Answer: True
Section 4: Policy Loans and Grace Periods (10 Questions)
31.Policy loans are available only on:
Answer: Policies with cash value (Whole, Universal, Variable Universal)
32.True or False: A policy loan reduces both the cash value and death benefit if
unpaid.
Answer: True
33.The insurer may delay a policy loan or surrender for up to:
Answer: 6 months
34.True or False: Policy loan interest is tax-deductible.
Answer: False
35.If the insured dies with an outstanding policy loan, the death benefit is:
Answer: Reduced by the loan plus interest
