Texas Life & Health Insurance Exam — All Questions

Under the misstatement of age provision in a health policy, if the insured's age was understated on the application, the benefits are:

• a.Adjusted to the amount the premium actually paid would have purchased at the insured's correct age✓
• b.Automatically doubled as a penalty on the insurer for accepting an application that stated an incorrect age
• c.Voided entirely, ending the policy
• d.Left completely unchanged

The misstatement of age provision does not void the policy; instead, if the age was misstated, the benefit is adjusted to what the premiums paid would have bought at the true age, so an understated age (which meant an underpaid premium) results in a proportionately reduced benefit. The policy is not canceled, benefits are not doubled, and they are not left unchanged. This keeps the insurer's payout consistent with the premium that was actually charged.

A 'probationary period' in a health insurance policy is:

• a.The time allowed to return a new policy for a refund, which is actually the free-look provision rather than an initial waiting period on coverage
• b.The days of leeway to pay a late premium
• c.A schedule for making premium payments
• d.An initial waiting period after the policy takes effect before benefits for certain conditions, such as sickness, are covered✓

A probationary period is an initial span of time (often the first few weeks) after the policy's effective date during which losses from certain causes, commonly sickness, are not yet covered, reducing the risk of insuring someone already becoming ill. It is not the free-look period, the grace period, or a payment schedule. The probationary period is a one-time waiting period at the start of coverage, distinct from the recurring grace period for premium payments.

The free-look provision in a health insurance policy allows the policyowner to:

• a.Change who is insured under the policy
• b.Permanently increase the policy's benefits beyond what was originally issued, which the free-look provision does not do
• c.Skip paying the first premium
• d.Examine the policy for a stated number of days and return it for a full premium refund if not satisfied✓

The free-look provision gives the policyowner a set number of days after receiving the policy to review it and, if dissatisfied for any reason, return it for a full refund of premium as though it were never issued. It does not let the owner skip a premium, change the insured, or increase benefits. The free look is a consumer protection ensuring buyers have time to make sure the coverage meets their needs before committing.

The insuring clause of a health insurance policy:

• a.Names the producer who sold the policy
• b.Sets the schedule for paying premiums
• c.States the insurer's promise to pay benefits for covered losses and defines the basic scope of coverage✓
• d.Lists the conditions the policy will not cover, which is the function of the exclusions rather than the insuring clause

The insuring clause is the insurer's core promise: it states that the insurer will pay benefits for the losses the policy covers and broadly defines the coverage being provided. Listing what is not covered is the function of the exclusions. Setting the premium schedule is a separate provision, and naming the producer is not part of the insuring clause. The insuring clause establishes the fundamental agreement to provide coverage, from which the rest of the policy elaborates.

An impairment (exclusion) rider attached to a health insurance policy:

• a.Permanently excludes coverage for a specified pre-existing condition or body part✓
• b.Adds coverage for a brand-new condition that first arises after the policy is issued
• c.Reduces the policy's deductible
• d.Increases the overall benefit amount

An impairment rider (also called an exclusion rider) allows the insurer to issue a policy while excluding a particular existing condition or body part from coverage, so the applicant can be insured for everything else. It does not add coverage, lower the deductible, or increase benefits, its effect is to remove coverage for the named impairment. This rider lets an insurer cover an otherwise higher-risk applicant by carving out the specific problem.

The optional provision addressing 'other insurance in this insurer' is concerned with:

• a.The size of the medical deductible
• b.Situations where an insured holds multiple policies with the same insurer, limiting total benefits to prevent overinsurance✓
• c.The insured's separate life insurance policies held with other companies, which is unrelated to holding duplicate health policies with the same insurer
• d.The length of the elimination period

This optional provision applies when an insured has more than one policy of the same kind with the same insurer; it lets the insurer limit the total benefits payable (often refunding the premium for the excess coverage) so the insured cannot be overinsured and profit from a loss. It does not concern separate life insurance, the deductible, or the elimination period. The provision reflects the principle that health coverage should reimburse loss, not create a gain from duplicate policies.

In group insurance, the individual members of the group receive:

• a.Their own master contracts to keep
• b.Certificates of coverage, while a single master policy is issued to the sponsor✓
• c.Separately underwritten individual policies issued individually to each member of the group
• d.No documentation of their coverage

In group insurance, the insurer issues one master policy to the sponsor (such as an employer or association), and each covered member receives a certificate of coverage that summarizes their benefits and rights. Members do not get individually underwritten policies, are not left without documentation, and do not each hold a master contract. The master-policy-and-certificate structure is a defining feature of group insurance and is why group underwriting looks at the group rather than each person.

In a noncontributory group insurance plan, the employer pays the entire premium, and as a result insurers generally require that:

• a.Only employees who volunteer are covered
• b.Coverage remain entirely optional for each worker
• c.100 percent of eligible employees be covered✓
• d.No employees be covered until they contribute

In a noncontributory plan the employer pays the full premium, so insurers typically require that 100 percent of eligible employees participate; universal participation eliminates adverse selection because no one can opt out and leave only higher-risk workers in the plan. It is not limited to volunteers, does not exclude everyone, and is not optional. The 100 percent rule for noncontributory plans contrasts with the lower participation percentages allowed when employees share the cost.

In a contributory group plan, in which employees share in the premium cost, insurers usually require that:

• a.A high percentage, such as 75 percent, of eligible employees enroll to limit adverse selection✓
• b.Only the employer be covered under the plan
• c.No employees be allowed to enroll
• d.Exactly 100 percent of employees enroll every year, a level generally required only for noncontributory plans

When employees pay part of the premium (a contributory plan), insurers require that a substantial share of those eligible, often around 75 percent, actually enroll, so the group does not fill up mainly with people who expect to have claims. Requiring no enrollment or only the employer makes no sense, and 100 percent participation is generally required only for noncontributory plans, where the employer pays everything. The participation threshold guards the group against adverse selection.

When an employee leaves a group life insurance plan, the conversion privilege generally allows them to:

• a.Keep the group premium rate for life
• b.Convert to an individual permanent policy without evidence of insurability, usually within 31 days✓
• c.Continue under the master policy indefinitely even after leaving the employer, which the group contract does not allow
• d.Receive a cash refund of prior premiums

The conversion privilege lets a departing employee convert their group life coverage to an individual permanent policy without proving insurability, typically within 31 days of leaving, though the individual premium is based on the person's attained age. It does not preserve the group rate, refund premiums, or keep the person under the master policy. Conversion protects coverage for someone who might otherwise be uninsurable, which is especially valuable if their health has declined.

Federal COBRA continuation generally allows an eligible employee who loses group health coverage to:

• a.Enroll in Medicare years before age 65 as a substitute for the lost employer coverage
• b.Keep the group coverage permanently
• c.Receive continued coverage at no cost
• d.Continue the group health coverage for a limited time by paying the premium themselves✓

COBRA lets qualified individuals who experience a qualifying event (such as job loss or reduced hours) continue their group health coverage for a limited period by paying the premium themselves, generally the full cost plus a small administrative charge. It is not free, not permanent, and not a path to early Medicare. COBRA bridges a coverage gap so a person does not go uninsured while between jobs or plans, though the enrollee bears the cost the employer once shared.

Medicare Part A primarily covers:

• a.Outpatient prescription drugs
• b.Inpatient hospital care, skilled nursing facility care, hospice, and some home health care✓
• c.Routine vision and dental care
• d.Routine physician office visits and outpatient services, which are actually covered under Part B

Medicare Part A is hospital insurance, covering inpatient hospital stays, skilled nursing facility care following a hospitalization, hospice care, and certain home health services. Physician office visits and outpatient care fall under Part B, prescription drugs under Part D, and routine vision and dental are generally not covered by Original Medicare. Part A is usually premium-free for those who paid Medicare taxes long enough, and remembering that Part A equals hospital coverage is a core exam fact.

Medicare Part B primarily covers:

• a.Long-term custodial nursing home care, which Medicare largely excludes from coverage
• b.Inpatient hospital confinement
• c.Physician services, outpatient care, and many preventive services✓
• d.Outpatient prescription drugs only

Medicare Part B is medical insurance, covering physician services, outpatient hospital care, durable medical equipment, and a range of preventive services; beneficiaries pay a monthly premium for it. Inpatient hospital care is Part A, prescription drugs are Part D, and long-term custodial care is largely not covered by Medicare at all. Knowing that Part B handles doctor and outpatient services, while Part A handles hospital stays, is essential for advising Medicare-eligible clients.

Medicare Part D provides:

• a.Hospice care benefits
• b.Custodial nursing home care
• c.Outpatient prescription drug coverage offered through private insurers✓
• d.Inpatient hospital coverage, which is the role of Part A instead

Medicare Part D is the prescription drug benefit, delivered through private insurers approved by Medicare, and it helps beneficiaries pay for outpatient medications. Inpatient hospital care is Part A, hospice is also under Part A, and custodial nursing home care is generally not a Medicare benefit. Part D was added to fill the prescription drug gap in Original Medicare, and beneficiaries choose a stand-alone drug plan or get drug coverage bundled into a Medicare Advantage plan.

Medicare Advantage (Part C) plans are best described as coverage that:

• a.Is administered directly by the federal government rather than through the private insurers that actually offer these plans
• b.Is identical to a Medicare Supplement policy
• c.Covers prescription drugs and nothing else
• d.Is offered by private insurers and bundles Part A and Part B benefits, often adding extra coverage✓

Medicare Advantage (Part C) plans are offered by private insurers approved by Medicare and provide Part A and Part B benefits together, frequently adding extras such as drug, dental, or vision coverage, often through an HMO or PPO network. They are not the same as Medigap (which supplements Original Medicare), are not run directly by the government, and cover far more than drugs alone. Part C is an alternative way to receive Medicare benefits through a private plan.

Medicare Supplement (Medigap) policies are designed to:

• a.Serve as a stand-alone prescription drug plan, which is the function of Part D rather than a Medicare Supplement policy
• b.Completely replace Medicare coverage
• c.Pay for long-term custodial care
• d.Help pay costs Medicare leaves to the beneficiary, such as deductibles and coinsurance, using standardized plans✓

Medigap policies supplement Original Medicare by paying some of the out-of-pocket costs Medicare does not, such as deductibles, coinsurance, and copayments, and they are sold as standardized plans so consumers can compare them easily. They do not replace Medicare, are not primarily drug plans, and do not cover long-term custodial care. Medigap works alongside Original Medicare, filling its gaps, and cannot be paired with a Medicare Advantage plan at the same time.

In addition to retirement income, the federal Social Security program also provides:

• a.Property damage coverage
• b.Long-term custodial care coverage for extended nursing home stays, which Social Security does not provide
• c.Survivor benefits to a worker's dependents and disability benefits to qualifying workers✓
• d.Routine dental benefits

Social Security is a social insurance program that pays retirement, survivor, and disability benefits: survivor benefits go to the dependents of a deceased worker, and disability benefits go to workers who become disabled and meet the earnings and work-history requirements. It does not provide property, dental, or long-term custodial care coverage. Because Social Security offers a base of survivor and disability protection, producers factor it in when calculating how much private coverage a client still needs.

Under the federal Affordable Care Act, adult children may generally remain covered on a parent's health plan until they reach age:

• a.18
• b.21
• c.30
• d.26✓

The Affordable Care Act allows young adults to stay on a parent's health plan until age 26, regardless of whether they are married, in school, or financially independent. Ages 18, 21, and 30 are not the federal threshold. This provision is one of the most widely used ACA reforms, helping young adults maintain continuous coverage during early career years, and it is a frequently tested federal figure on the licensing exam.

A central federal Affordable Care Act reform to individual and small-group health coverage was to:

• a.Remove all preventive care from coverage
• b.Prohibit denying coverage or charging more due to pre-existing conditions and require coverage of essential health benefits✓
• c.Allow insurers to impose lifetime dollar limits on benefits, which is the opposite of what the law did, since it banned such lifetime limits
• d.Permit denial of coverage for people with prior illnesses

The ACA prohibits insurers in the individual and small-group markets from denying coverage or charging higher premiums because of pre-existing conditions, and it requires plans to cover a set of essential health benefits. It did the opposite of allowing lifetime limits (it banned them), did not permit denial for prior illness, and expanded rather than removed preventive care (which many plans must cover at no cost sharing). Guaranteed issue and essential health benefits are hallmark ACA consumer protections.

Medicaid is best described as a program that is:

• a.Purely federal and based only on the recipient's age, a description that actually fits Medicare rather than Medicaid
• b.Jointly funded by the federal and state governments and provides coverage based on financial need✓
• c.Available to everyone regardless of income or assets
• d.Funded entirely by the insured's own premiums

Medicaid is a joint federal-state program that provides health coverage to low-income individuals and families based on financial need (limited income and assets), with the federal government and states sharing the cost. It is not purely federal or age-based (that description fits Medicare), is not premium-funded by recipients, and is not open to everyone regardless of income, because it is means-tested. Medicaid is also the largest payer for long-term custodial care in the United States, a gap Medicare largely leaves uncovered.

A life policy has been in force well beyond its incontestable period. For which reason may the insurer still refuse to pay a death claim?

• a.The insured misstated a minor detail about a childhood illness on the original application
• b.The premium was never paid, so the coverage had actually lapsed before death✓
• c.The beneficiary designation had been changed more than once over the years
• d.The insured took up a dangerous hobby after the policy was issued

Incontestability bars the insurer from voiding the policy over application misstatements after the contestable period, but it does not create coverage that never existed; if the policy had lapsed for nonpayment, there is nothing to pay. A post-issue change of hobby or beneficiary does not void a policy, and old application misstatements can no longer be contested.

An insured dies during the grace period with one premium still unpaid. The insurer will most likely:

• a.Deny the claim because the premium was overdue
• b.Refund only the cash value to the beneficiary
• c.Pay the full death benefit and then bill the estate for the missed premium plus a penalty
• d.Pay the death benefit, reduced by the overdue premium✓

The grace period keeps coverage in force after the due date, so a death during that window is a covered claim; the insurer simply deducts the one unpaid premium from the proceeds. It neither denies the claim nor limits payment to cash value, and it does not add penalties.

Which of the following is NOT a typical requirement or effect of reinstating a lapsed life policy?

• a.A new contestable/incontestability period begins for statements made in the reinstatement application
• b.The policyowner receives a brand-new free-look (right-to-examine) period as if buying a new policy✓
• c.The policyowner must provide evidence of insurability
• d.Overdue premiums must be paid, usually with interest

Reinstatement restores the original contract, so it does not trigger a fresh free-look period. It does require proof of insurability, payment of back premiums with interest, and it restarts the contestable and suicide periods for the reinstatement application.

A major advantage of reinstating a lapsed policy rather than buying a brand-new one is that:

• a.The insurer waives all future underwriting for the life of the contract
• b.Premiums are based on the original (younger) issue age rather than the insured's current age✓
• c.Reinstatement lets the owner keep the original policy while the insurer forgives every overdue premium and all accrued interest as a courtesy
• d.The face amount is automatically doubled upon reinstatement

A reinstated policy keeps its original issue-age premium, which is normally lower than a new policy bought at the insured's older attained age. Premiums are still owed, the face amount is unchanged, and reinstatement itself requires evidence of insurability.

The insured's age was understated on a life application, and the error is found at the time of death. Under the misstatement of age provision, the insurer will:

• a.Adjust the death benefit to the amount the premiums paid would have purchased at the correct age✓
• b.Deny the claim entirely for material misrepresentation
• c.Pay the full face amount exactly as originally applied for, with no adjustment
• d.Automatically void the contract from inception and refund every premium the policyowner has paid over the years, with interest

Misstatement of age is corrected by adjusting benefits, not by voiding the contract; the insurer pays what the premiums actually paid would have bought at the true age. It is not treated as fraud, and the face amount is not paid unchanged when the age was wrong.

Because a misstatement understated the insured's true (older) age, the premiums charged were too low. The adjusted death benefit will therefore be:

• a.Higher than the stated face amount
• b.Reduced to zero because the application was inaccurate
• c.Exactly equal to the stated face amount
• d.Lower than the stated face amount✓

When the real age is older than stated, the premium paid was insufficient, so it would have purchased less coverage; the benefit is reduced accordingly. The policy is not voided, and the benefit is neither unchanged nor increased.

An insured dies by suicide 14 months after the policy was issued. The insurer will most likely:

• a.Deny all liability for the claim and simply retain every premium the policyowner had paid into the contract
• b.Refund the premiums paid (or return the cash value) instead of paying the face amount✓
• c.Pay double the face amount under the accidental death provision
• d.Pay the full death benefit like any other claim

A death by suicide within the suicide-clause period (commonly two years) is not paid as a death benefit; the insurer instead returns the premiums paid. Suicide is not an accidental death, and the insurer does not simply keep the premiums.

If suicide occurs after the policy's suicide-clause period (commonly two years) has elapsed, the insurer will:

• a.Pay one-half of the face amount
• b.Deny the claim as an excluded cause of death
• c.Pay the full death benefit like any other covered claim✓
• d.Refund only the premiums paid

Once the suicide period has passed, suicide is treated as any other cause of death and the full benefit is paid. Refunding premiums or denying the claim applies only within the initial suicide period.

The free-look provision in a life insurance policy gives the policyowner the right to:

• a.Change the named insured on the contract within the first month of ownership without providing new evidence of insurability
• b.Cancel the policy at any point during the first year and receive all premiums back
• c.Examine the delivered policy for a set number of days and return it for a full premium refund✓
• d.Borrow against the cash value immediately after issue

The free-look lets the owner review the actual delivered policy for a stated number of days (often 10) and return it for a full refund if unsatisfied. It is not a loan right, an unlimited first-year cancellation, or a way to change the insured.

Under the entire contract provision, the insurer may NOT:

• a.Amend the policy later by referencing the insurer's bylaws or other documents not attached to the contract✓
• b.Include an insuring clause stating its promise to pay
• c.Attach a copy of the application to the issued policy
• d.Attach the application to the policy and treat the two documents together as constituting the entire agreement between the insurer and the policyowner

The entire contract provision means the policy plus the attached application form the whole agreement; the insurer cannot alter it by pointing to outside documents such as its bylaws. Attaching the application, incorporating it, and including an insuring clause are all normal and permitted.

Which right belongs to the policyowner rather than to the insured (when they are different people)?

• a.Choosing whether to undergo a medical examination
• b.Determining the official medical cause of the insured's death for the purpose of certifying the claim to the company
• c.Naming and changing the beneficiary, taking policy loans, and surrendering the policy✓
• d.Setting the reserves the insurer must hold

Ownership rights, such as naming beneficiaries, borrowing, and surrendering, belong to the policyowner, who may or may not be the insured. Medical exams involve the insured, cause of death is a medical fact, and reserves are the insurer's actuarial obligation.

A policyowner assigns a life policy to a bank as security for a loan, intending the bank to have rights only up to the outstanding loan balance. This is a:

• a.Irrevocable beneficiary designation
• b.Absolute assignment
• c.Collateral assignment✓
• d.Change of insured

A collateral assignment transfers rights only to the extent of a debt, so anything above the loan balance still goes to the named beneficiary. An absolute assignment transfers all ownership, and neither a change of insured nor an irrevocable beneficiary describes pledging a policy for a loan.

A revocable beneficiary designation means the policyowner:

• a.Must obtain the beneficiary's written consent to make any change
• b.May change the beneficiary at any time without the beneficiary's consent✓
• c.Is legally barred from ever changing the beneficiary designation once the original choice has been recorded
• d.Has permanently given up ownership of the policy to the beneficiary

A revocable beneficiary has only an expectation, so the owner may change the designation at will. Needing consent describes an irrevocable beneficiary; the owner neither loses the right to change nor gives up ownership.

If a beneficiary is named irrevocably, the policyowner generally may NOT do which of the following without that beneficiary's consent?

• a.Keep the policy in force
• b.Continue to review and read the entire policy contract at any time without asking the beneficiary for permission
• c.Continue paying the policy premiums
• d.Change the beneficiary, take a policy loan, or surrender the policy✓

An irrevocable beneficiary has a vested interest, so ownership actions that could reduce or eliminate their interest, changing them, borrowing, or surrendering, require their consent. Paying premiums, reading the contract, and keeping it in force do not.

A death benefit is payable 'per stirpes.' If a primary beneficiary dies before the insured, that beneficiary's share will:

• a.Revert to the insurer
• b.Pass to that deceased beneficiary's own descendants (heirs)✓
• c.Automatically be paid to the insured's estate
• d.Be split among the surviving primary beneficiaries

Per stirpes ('by the branch') directs a deceased beneficiary's share down to that beneficiary's own descendants. Splitting it among survivors describes per capita, and the share does not revert to the insurer or default to the estate.

Under a per capita distribution among named beneficiaries, the proceeds are divided:

• a.In proportion to each beneficiary's premium contribution
• b.Equally among the surviving named beneficiaries at that level✓
• c.Entirely to the oldest surviving beneficiary
• d.By family branch, passing to descendants of a deceased beneficiary

Per capita ('by the head') splits the proceeds equally among the beneficiaries who are living to receive them. Passing a deceased beneficiary's share to their descendants is per stirpes; age and contribution do not determine the split.

Under a common disaster (simultaneous death) provision, if the insured and primary beneficiary die in the same accident and the order of death cannot be determined, proceeds are paid as though:

• a.The insurer proceeds as though neither the insured nor the primary beneficiary had actually died in the common accident, keeping the policy in force
• b.The insurer may retain the proceeds
• c.The insured survived the beneficiary, so proceeds go to the contingent beneficiary or the estate✓
• d.The primary beneficiary survived the insured

The common disaster clause presumes the insured outlived the beneficiary, so the money flows to the contingent beneficiary (or the estate) rather than into the deceased beneficiary's estate. It never lets the insurer keep the proceeds.

A contingent (secondary) beneficiary receives the death benefit when:

• a.The policy has lapsed for nonpayment
• b.The insured is still alive and paying premiums
• c.The primary beneficiary has died before the insured or cannot be located✓
• d.A scheduled premium payment is merely a few days late and still well within the policy's stated grace period

A contingent beneficiary is next in line and is paid only if no primary beneficiary is available at the insured's death. A living insured, a lapsed policy, or a late premium does not trigger payment.

A common problem with naming a minor child as the direct beneficiary of a life policy is that:

• a.The death benefit automatically becomes taxable income
• b.The insurer will refuse to issue the policy at all
• c.Insurers usually will not pay proceeds directly to a minor, so a guardian or trust may be required✓
• d.The insurer will double the required premium to cover the additional administrative risk of insuring on behalf of a minor child

Minors generally cannot give valid receipt for insurance proceeds, so payment may be delayed until a court appoints a guardian or a trust is used. It does not prevent issuance, change the tax treatment, or raise the premium.

Naming one's estate as the life insurance beneficiary can be disadvantageous because the proceeds may then be:

• a.Subjected to probate and exposed to the deceased's creditors✓
• b.Paid out faster than to a named individual
• c.Received completely income-tax-free with no conditions
• d.Automatically doubled by the insurer

Directing proceeds to the estate pulls them into probate, where they can be delayed and reached by creditors. A named beneficiary generally avoids probate; the estate route does not speed payment or increase the benefit.

A spendthrift clause attached to a life insurance settlement is designed to:

• a.Reduce the premium the policyowner is charged in exchange for restricting the beneficiary's access to the settlement funds
• b.Increase the death benefit paid to the beneficiary
• c.Protect the settlement proceeds from the beneficiary's creditors and from being spent all at once✓
• d.Let the beneficiary immediately withdraw the entire lump sum

A spendthrift clause keeps proceeds held under a settlement option out of reach of the beneficiary's creditors and prevents the beneficiary from squandering or assigning them in a lump sum. It neither raises the benefit nor lowers the premium.

The waiver of premium rider typically begins paying the policy's premiums only after:

• a.The insured reaches age 65, at which point the insurer begins paying the premiums for the policy automatically
• b.The policy has been surrendered for cash
• c.A waiting period (often six months) of continuous total disability✓
• d.The very first missed payment

Waiver of premium keeps the policy in force by having the insurer pay premiums during the insured's total disability, but only after a waiting period, commonly six months. It is not triggered by a single late payment, a specific age, or surrender.

The payor benefit rider on a juvenile life policy provides that, if the premium-paying adult dies or becomes disabled:

• a.The child's coverage terminates immediately and the insurer refunds the premiums that had been paid to date
• b.The policy automatically converts to term insurance
• c.The death benefit is paid at once to the child
• d.Premiums are waived until the child reaches a specified age✓

The payor benefit waives premiums on a child's policy if the paying adult dies or is disabled, keeping the coverage in force until the child reaches a stated age. Coverage does not end, and no death benefit is paid on the child who is still alive.

An accidental death benefit (double indemnity) rider generally pays the extra benefit only if death:

• a.Is caused by a covered illness or natural bodily condition rather than by an external accidental injury to the insured
• b.Occurs after the insured has reached age 70
• c.Results from an accident, often within 90 days of the injury, and not from an excluded cause✓
• d.Results from any cause whatsoever

The accidental death rider pays an additional amount only when death is accidental and occurs within a stated time (commonly 90 days) of the injury, excluding causes like illness or suicide. It does not pay for death from any cause or from sickness.

Under an AD&D benefit, the amount paid for the accidental loss of a body part such as a hand or eye is called the:

• a.Face amount
• b.Residual benefit
• c.Principal sum
• d.Capital sum✓

In AD&D coverage, the capital sum is paid for dismemberment or loss of sight, while the principal sum is paid for accidental death. Residual benefit is a disability-income concept, and face amount is a life insurance term.

The return-of-premium rider on a life policy is funded essentially as a(n):

• a.Decreasing term rider
• b.Increasing term rider equal to the premiums paid✓
• c.Immediate annuity
• d.Paid-up whole life rider

Return of premium is achieved with an increasing term rider whose amount grows to match the cumulative premiums, so surviving the term returns those premiums. It is not decreasing term, whole life, or an annuity.

Adding a level term rider to a whole life policy lets the owner:

• a.Permanently reduce the base policy's face amount
• b.Permanently eliminate the base policy's cash value accumulation in exchange for the additional term protection
• c.Add temporary extra coverage (for example on a spouse or for a set period) at relatively low cost✓
• d.Avoid all future underwriting on the base policy

A term rider layers inexpensive, temporary coverage on top of permanent insurance, often to cover a spouse or a period of higher need. It does not shrink the base face amount, remove cash value, or waive future underwriting.

An accelerated (living) death benefit rider allows the insured to receive part of the death benefit while still alive if the insured:

• a.Changes to a higher-paying job
• b.Relocates to another region
• c.Is diagnosed as terminally or chronically ill✓
• d.Reaches normal retirement age

The accelerated death benefit advances a portion of the face amount when the insured is terminally or chronically ill, helping pay care costs. Ordinary events like a new job, retirement, or moving do not trigger it.

A long-term care rider attached to a life insurance policy generally:

• a.Pays for qualifying long-term care by drawing down the policy's death benefit✓
• b.Pays only a death benefit and nothing during life
• c.Is prohibited from being attached to life insurance
• d.Replaces the insured's Medicare coverage entirely and pays all future hospital and physician bills directly

An LTC rider accelerates the death benefit to reimburse qualifying long-term care expenses, reducing the remaining death benefit by what is used. It is a permitted living benefit, not a Medicare substitute.

A cost-of-living (COLA) rider on a life policy increases the:

• a.The guaranteed interest rate credited to the policy's cash value, raising that rate each year to match inflation
• b.Dividend scale on a participating policy
• c.Premium only, with no change to any benefit
• d.Death benefit periodically to offset inflation, usually tied to an index✓

A COLA rider raises the death benefit over time, often linked to an inflation index, so protection keeps pace with rising costs. It is not merely a premium increase, nor does it change the guaranteed interest or dividend scale.