Health and Life Insurance Exam Final
Exam Questions and Answers Latest
Version Already Passed
What does the term “premium” mean in an insurance policy?
✔✔ The amount the policyholder pays to keep the insurance coverage active
What is a beneficiary in a life insurance policy?
✔✔ The person or entity designated to receive the death benefit when the insured dies
What does the grace period in a life insurance policy allow?
✔✔ A set time after a missed premium payment during which coverage remains in force
Define “cash value” in a whole life insurance policy.
✔✔ The savings component that accumulates and can be borrowed against or withdrawn
What is the difference between term life and whole life insurance?
✔✔ Term life provides coverage for a specific time with no cash value; whole life provides
lifelong coverage with cash value accumulation
1
,What is the contestability period?
✔✔ The time frame, usually two years, during which the insurer can investigate and deny claims
for misstatements
What is the purpose of a rider in an insurance policy?
✔✔ An optional add-on that modifies or expands the coverage or benefits of the policy
Explain “insurable interest.”
✔✔ A financial or emotional stake that the policyholder must have in the insured to purchase a
policy legally
What happens if a policyholder does not pay their premium within the grace period?
✔✔ The policy lapses and coverage ends unless reinstated
What is the elimination period in a disability insurance policy?
✔✔ The waiting period after a disability begins before benefits start being paid
2
,How does a health maintenance organization (HMO) operate?
✔✔ It requires members to use a network of providers and often a primary care physician
coordinates care
What does the term “coinsurance” mean in health insurance?
✔✔ The percentage of costs the insured pays after the deductible is met
What is the purpose of underwriting in life and health insurance?
✔✔ To assess risk and determine whether to accept the application and at what premium
What does a waiver of premium rider do?
✔✔ Waives premium payments if the insured becomes disabled and unable to work
Define “accidental death benefit rider.”
✔✔ A rider that pays an extra death benefit if the insured dies as a result of an accident
What is a policy loan in whole life insurance?
✔✔ A loan the policyholder can take against the cash value of the policy
3
, What is meant by “renewable term insurance”?
✔✔ A term policy that allows the insured to renew coverage at the end of the term without
proving insurability
What is the free-look period in an insurance policy?
✔✔ A set number of days during which the policyholder can cancel the policy and receive a full
refund
Why is the beneficiary designation important in life insurance?
✔✔ It directs who will receive the death benefit upon the insured’s death
What does “incontestability clause” protect against?
✔✔ Prevents the insurer from voiding the policy after the contestability period except for
nonpayment of premiums
What is the primary purpose of disability income insurance?
✔✔ To replace a portion of the insured’s income if they become disabled and unable to work
4
Exam Questions and Answers Latest
Version Already Passed
What does the term “premium” mean in an insurance policy?
✔✔ The amount the policyholder pays to keep the insurance coverage active
What is a beneficiary in a life insurance policy?
✔✔ The person or entity designated to receive the death benefit when the insured dies
What does the grace period in a life insurance policy allow?
✔✔ A set time after a missed premium payment during which coverage remains in force
Define “cash value” in a whole life insurance policy.
✔✔ The savings component that accumulates and can be borrowed against or withdrawn
What is the difference between term life and whole life insurance?
✔✔ Term life provides coverage for a specific time with no cash value; whole life provides
lifelong coverage with cash value accumulation
1
,What is the contestability period?
✔✔ The time frame, usually two years, during which the insurer can investigate and deny claims
for misstatements
What is the purpose of a rider in an insurance policy?
✔✔ An optional add-on that modifies or expands the coverage or benefits of the policy
Explain “insurable interest.”
✔✔ A financial or emotional stake that the policyholder must have in the insured to purchase a
policy legally
What happens if a policyholder does not pay their premium within the grace period?
✔✔ The policy lapses and coverage ends unless reinstated
What is the elimination period in a disability insurance policy?
✔✔ The waiting period after a disability begins before benefits start being paid
2
,How does a health maintenance organization (HMO) operate?
✔✔ It requires members to use a network of providers and often a primary care physician
coordinates care
What does the term “coinsurance” mean in health insurance?
✔✔ The percentage of costs the insured pays after the deductible is met
What is the purpose of underwriting in life and health insurance?
✔✔ To assess risk and determine whether to accept the application and at what premium
What does a waiver of premium rider do?
✔✔ Waives premium payments if the insured becomes disabled and unable to work
Define “accidental death benefit rider.”
✔✔ A rider that pays an extra death benefit if the insured dies as a result of an accident
What is a policy loan in whole life insurance?
✔✔ A loan the policyholder can take against the cash value of the policy
3
, What is meant by “renewable term insurance”?
✔✔ A term policy that allows the insured to renew coverage at the end of the term without
proving insurability
What is the free-look period in an insurance policy?
✔✔ A set number of days during which the policyholder can cancel the policy and receive a full
refund
Why is the beneficiary designation important in life insurance?
✔✔ It directs who will receive the death benefit upon the insured’s death
What does “incontestability clause” protect against?
✔✔ Prevents the insurer from voiding the policy after the contestability period except for
nonpayment of premiums
What is the primary purpose of disability income insurance?
✔✔ To replace a portion of the insured’s income if they become disabled and unable to work
4
