Arizona Life Insurance Exam - Life
Insurance Policy Provisions, Options,
and Riders
Activities of Daily Living - answer A person's essential activities that include bathing,
dressing, eating, transferring, toileting, continence (also known as ADLs)
Assignment - answer Transfer of rights of policy ownership without the consent of the
insurer, but must inform them
Contingent Beneficiary - answer A beneficiary who has second claim to the policy
proceeds after the death of the insured (usually after the death of the primary
beneficiary)
NAIC - answer National Association of Insurance Commissioners, an organization
composed of insurance commissioners from all 50 states, formed to resolve insurance
regulatory issues
Primary Beneficiary - answerA beneficiary who has the first claim to the policy proceeds
after the death of the insured
Principal Amount - answerThe face value of the policy, the original amount invested
before the earnings
Trust - answerAn arrangement in which funds or property are held by a person or
corporation for the benefits of another person (trust beneficiary)
Standard Policy Provision - answerMust be included in all life insurance policies
-Ownership
-Assignment
-Right to Examine (free look)
-Payment of Premium
-Grace Period
-Reinstatement
-Misstatement of age or gender
-Incontestability
-Payment of Claims
-Limitation of Liability
-Exclusions
, Ownership - answerOnly the policyowner has the _________ rights under the policy,
and not the insured or beneficiary. They pay the premium, and have insurable interest in
the insured, they also name and change the beneficiary, receive the living benefit, and
select a benefit payment option
Absolute Assignment - answerTransfer of all right of ownership to another person or
entity, permanent and total transfer
Collateral Assignment - answerTransfer of partial rights to another person, usually done
in order to secure a loan or some other transaction
Right to Examine - answer(also known as free look) The policyowner has 10 days from
delivery receipt to look over the policy and return it for a full refund of premium
Entire Contract - answerThe policy and a copy of the application, along with any riders
or amendments, constitute the entire contract and must be provided
Policy Title - answerEvery policy must include on its face and back a ____________
that describes the policy in brief
Payment of Premiums - answerThis provision stipulates when the premiums are due,
how often they are to be paid, and to whom
Modifications - answerThese changes in the policy must be endorsed on, or attached to,
the policy in writing over the signature of an executive officer of the insurer (no agent
has the right to make _____________)
Grace Period - answerThe period of time after the premium due date that the
policyowner has to pay the premium before the policy lapses (30 days for AZ) (if the
insured dies during the ____________ the death benefit is payable, minus the missing
premium) (31 days for group policies)
Reinstatement - answerThis provision allows a lapsed policy to be put back in force,
with a maximum time limit of 3 years (they must provide evidence of insurability, and
pay all back premiums and interest) (surrendered polices cannot be reinstated)
Misstatement of Age or Gender - answerThis provision allows the insurer to adjust the
policy at any time due to a _____________________________, must be adjusted to the
truthful amount
Incontestability - answerThis prevents an insurer from denying a claim due to
statements in the application after the policy has been in force for 2 years, even if there
has been a material misstatement of facts or concealment of a material fact
Policy Settlement - answerOnce the policy matures, the insurer may pay less than the
face amount to account for any unpaid premiums or policy loans still out
Insurance Policy Provisions, Options,
and Riders
Activities of Daily Living - answer A person's essential activities that include bathing,
dressing, eating, transferring, toileting, continence (also known as ADLs)
Assignment - answer Transfer of rights of policy ownership without the consent of the
insurer, but must inform them
Contingent Beneficiary - answer A beneficiary who has second claim to the policy
proceeds after the death of the insured (usually after the death of the primary
beneficiary)
NAIC - answer National Association of Insurance Commissioners, an organization
composed of insurance commissioners from all 50 states, formed to resolve insurance
regulatory issues
Primary Beneficiary - answerA beneficiary who has the first claim to the policy proceeds
after the death of the insured
Principal Amount - answerThe face value of the policy, the original amount invested
before the earnings
Trust - answerAn arrangement in which funds or property are held by a person or
corporation for the benefits of another person (trust beneficiary)
Standard Policy Provision - answerMust be included in all life insurance policies
-Ownership
-Assignment
-Right to Examine (free look)
-Payment of Premium
-Grace Period
-Reinstatement
-Misstatement of age or gender
-Incontestability
-Payment of Claims
-Limitation of Liability
-Exclusions
, Ownership - answerOnly the policyowner has the _________ rights under the policy,
and not the insured or beneficiary. They pay the premium, and have insurable interest in
the insured, they also name and change the beneficiary, receive the living benefit, and
select a benefit payment option
Absolute Assignment - answerTransfer of all right of ownership to another person or
entity, permanent and total transfer
Collateral Assignment - answerTransfer of partial rights to another person, usually done
in order to secure a loan or some other transaction
Right to Examine - answer(also known as free look) The policyowner has 10 days from
delivery receipt to look over the policy and return it for a full refund of premium
Entire Contract - answerThe policy and a copy of the application, along with any riders
or amendments, constitute the entire contract and must be provided
Policy Title - answerEvery policy must include on its face and back a ____________
that describes the policy in brief
Payment of Premiums - answerThis provision stipulates when the premiums are due,
how often they are to be paid, and to whom
Modifications - answerThese changes in the policy must be endorsed on, or attached to,
the policy in writing over the signature of an executive officer of the insurer (no agent
has the right to make _____________)
Grace Period - answerThe period of time after the premium due date that the
policyowner has to pay the premium before the policy lapses (30 days for AZ) (if the
insured dies during the ____________ the death benefit is payable, minus the missing
premium) (31 days for group policies)
Reinstatement - answerThis provision allows a lapsed policy to be put back in force,
with a maximum time limit of 3 years (they must provide evidence of insurability, and
pay all back premiums and interest) (surrendered polices cannot be reinstated)
Misstatement of Age or Gender - answerThis provision allows the insurer to adjust the
policy at any time due to a _____________________________, must be adjusted to the
truthful amount
Incontestability - answerThis prevents an insurer from denying a claim due to
statements in the application after the policy has been in force for 2 years, even if there
has been a material misstatement of facts or concealment of a material fact
Policy Settlement - answerOnce the policy matures, the insurer may pay less than the
face amount to account for any unpaid premiums or policy loans still out
