Chapter 12 RSM Exam Questions and
Answers with Verified Solutions | Latest
Updated 2026
Ownership Clause Grants the policyholder all contractual
rights
including beneficiary changes and policy
surrender.
Entire-Contract Clause Specifies that the policy and application
together
form the entire agreement.
Incontestable Clause Prevents insurer from contesting the policy
after
two years except in limited cases.
Suicide Clause Limits insurer liability to refund of
premiums if
suicide occurs within two years.
Grace Period Allows a period (usually 31 days) to pay
overdue
premiums without losing coverage.
Reinstatement Clause Allows a lapsed policy to be reinstated with
proof
of insurability and payment of overdue
premiums.
, Misstatement of Age or Sex Adjusts the benefit based on correct
demographic
information rather than canceling the
policy.
Primary Beneficiary First person designated to receive policy
proceeds.
Contingent Beneficiary Receives proceeds if the primary
beneficiary is
deceased.
Revocable Beneficiary Can be changed without beneficiary
consent.
Irrevocable Beneficiary Cannot be changed without beneficiary
approval.
Specific Beneficiary Individually named beneficiary.
Class Beneficiary Group designation such as children of the
insured.
Change-of-Plan Provision Allows policyholder to exchange for a
different
type of policy.
Assignment Transfer of policy rights to another party.
Answers with Verified Solutions | Latest
Updated 2026
Ownership Clause Grants the policyholder all contractual
rights
including beneficiary changes and policy
surrender.
Entire-Contract Clause Specifies that the policy and application
together
form the entire agreement.
Incontestable Clause Prevents insurer from contesting the policy
after
two years except in limited cases.
Suicide Clause Limits insurer liability to refund of
premiums if
suicide occurs within two years.
Grace Period Allows a period (usually 31 days) to pay
overdue
premiums without losing coverage.
Reinstatement Clause Allows a lapsed policy to be reinstated with
proof
of insurability and payment of overdue
premiums.
, Misstatement of Age or Sex Adjusts the benefit based on correct
demographic
information rather than canceling the
policy.
Primary Beneficiary First person designated to receive policy
proceeds.
Contingent Beneficiary Receives proceeds if the primary
beneficiary is
deceased.
Revocable Beneficiary Can be changed without beneficiary
consent.
Irrevocable Beneficiary Cannot be changed without beneficiary
approval.
Specific Beneficiary Individually named beneficiary.
Class Beneficiary Group designation such as children of the
insured.
Change-of-Plan Provision Allows policyholder to exchange for a
different
type of policy.
Assignment Transfer of policy rights to another party.
