OHIO LIFE ACCIDENT & HEALTH INSURANCE Exam Series
11-35 Life Insurance Policies Questions & Answers with
Detailed Rationales
QUESTION>> 1:
The incontestability clause prevents the insurer from:
A. Canceling a policy for misstatement of age
B. Denying a claim after two years based on misrepresentation
(except fraud)
C. Canceling the policy for nonpayment of premium
D. Adjusting coverage amounts within the contestable period
ANSWER>>: ✓B
RATIONALE: After two years, the insurer cannot contest policy validity
for
misrepresentation, except in cases of fraud. Nonpayment is still
grounds for lapse.
QUESTION>> 2:
A participating life insurance policy is one that:
A. Cannot pay dividends under any circumstances
B. Credits interest but charges higher premiums
C. Allows policyholders to share in company profits through
dividends
D. Is offered only by mutual companies
ANSWER>>: ✓ C
RATIONALE: Participating policies pay dividends to policyowners if
the insurer experiences a surplus. Although most mutual insurers issue
such policies, stock insurers may issue them as well, making option D
too restrictive.
QUESTION>> 3:
Which of the following types of term life insurance provides a level
death benefit and a decreasing premium over time?
A. Increasing term
B. Renewable term
C. Decreasing term
,D. Level term
ANSWER>>: ✓D
RATIONALE: Level term insurance maintains a constant death benefit
and level premiums for the full term. Decreasing term reduces the
death benefit, not the premiums.
QUESTION>> 4:
Which component of a permanent life insurance policy is most directly
responsible for policy cash value accumulation?
A. Premium mode
B. Mortality charge
C. Cash value interest or investment component
D. Policy loan provision
ANSWER>>: ✓C
RATIONALE: The investment or interest-bearing portion of the
premium funds the policy’s cash value growth. Mortality and expense
charges reduce this growth.
QUESTION>> 5:
Which of the following riders enables the insured to increase coverage
without evidence of insurability?
A. Waiver of Premium Rider
B. Guaranteed Insurability Rider
C. Accidental Death Benefit Rider
D. Cost of Living Rider
ANSWER>>: ✓ B
RATIONALE: The Guaranteed Insurability Rider allows policyholders
to purchase additional coverage at specified times without a medical
exam, a key advantage for adapting to life changes.
QUESTION>> 6:
What is the primary difference between whole life and term life
insurance?
A. Term life provides lifelong coverage
B. Whole life builds cash value while term life does not
C. Whole life is renewable; term life is not
,D. Term life always pays dividends; whole life does not
ANSWER>>: ✓B
RATIONALE: Whole life policies provide lifelong coverage and a cash
value accumulation feature, while term life policies offer pure death
protection with no savings component.
QUESTION>> 7:
In a Universal Life policy, the policyowner may adjust all of the
following EXCEPT:
A. Premium amount
B. Death benefit
C. Investment performance of the policy
D. Frequency of premium payments
ANSWER>>: ✓C
RATIONALE: Policyowners of Universal Life policies can adjust
premiums and death benefits within limits, but investment
performance depends on insurer’s general account earnings, not
owner control.
QUESTION>> 8:
Which of the following statements about Variable Life insurance is
TRUE?
A. Cash value is guaranteed by the insurer
B. The policyowner assumes investment risk
C. Premiums may vary based on market conditions
D. It is not considered a security
ANSWER>>: ✓B
RATIONALE: Variable Life insurance links cash value to separate
account investments; policyowners assume investment risk and must
hold a securities license to sell such policies.
QUESTION>> 9:
Which nonforfeiture option provides the same face amount as the
original policy for a limited time?
A. Cash surrender
B. Reduced paid-up
, C. Extended term
D. Automatic premium loan
ANSWER>>: ✓C
RATIONALE: The extended term option converts the policy’s cash
value to a term policy of equal face amount for a limited duration.
Reduced paid-up provides a smaller permanent policy.
QUESTION>> 10:
What are the living benefits of whole life insurance?
Answer>>
Loan values
Question>> 1
When does an adjustable life policy accumulate cash value?
Answer>>
When premiums are paid at more than the cost of the policy
Question>> 2
When would a 20-pay whole life policy endow?
Answer>>
When the insured reaches age 100
Question>> 3
A policy states that the insurer will pay a specified face amount if the
insured dies within the 20-year premium paying period and nothing if
he dies after. What type of policy is this?
Answer>>
20-year level term
Question>> 4
What type of life insurance policy provides permanent protection?
Answer>>
Whole life
Question>> 5
11-35 Life Insurance Policies Questions & Answers with
Detailed Rationales
QUESTION>> 1:
The incontestability clause prevents the insurer from:
A. Canceling a policy for misstatement of age
B. Denying a claim after two years based on misrepresentation
(except fraud)
C. Canceling the policy for nonpayment of premium
D. Adjusting coverage amounts within the contestable period
ANSWER>>: ✓B
RATIONALE: After two years, the insurer cannot contest policy validity
for
misrepresentation, except in cases of fraud. Nonpayment is still
grounds for lapse.
QUESTION>> 2:
A participating life insurance policy is one that:
A. Cannot pay dividends under any circumstances
B. Credits interest but charges higher premiums
C. Allows policyholders to share in company profits through
dividends
D. Is offered only by mutual companies
ANSWER>>: ✓ C
RATIONALE: Participating policies pay dividends to policyowners if
the insurer experiences a surplus. Although most mutual insurers issue
such policies, stock insurers may issue them as well, making option D
too restrictive.
QUESTION>> 3:
Which of the following types of term life insurance provides a level
death benefit and a decreasing premium over time?
A. Increasing term
B. Renewable term
C. Decreasing term
,D. Level term
ANSWER>>: ✓D
RATIONALE: Level term insurance maintains a constant death benefit
and level premiums for the full term. Decreasing term reduces the
death benefit, not the premiums.
QUESTION>> 4:
Which component of a permanent life insurance policy is most directly
responsible for policy cash value accumulation?
A. Premium mode
B. Mortality charge
C. Cash value interest or investment component
D. Policy loan provision
ANSWER>>: ✓C
RATIONALE: The investment or interest-bearing portion of the
premium funds the policy’s cash value growth. Mortality and expense
charges reduce this growth.
QUESTION>> 5:
Which of the following riders enables the insured to increase coverage
without evidence of insurability?
A. Waiver of Premium Rider
B. Guaranteed Insurability Rider
C. Accidental Death Benefit Rider
D. Cost of Living Rider
ANSWER>>: ✓ B
RATIONALE: The Guaranteed Insurability Rider allows policyholders
to purchase additional coverage at specified times without a medical
exam, a key advantage for adapting to life changes.
QUESTION>> 6:
What is the primary difference between whole life and term life
insurance?
A. Term life provides lifelong coverage
B. Whole life builds cash value while term life does not
C. Whole life is renewable; term life is not
,D. Term life always pays dividends; whole life does not
ANSWER>>: ✓B
RATIONALE: Whole life policies provide lifelong coverage and a cash
value accumulation feature, while term life policies offer pure death
protection with no savings component.
QUESTION>> 7:
In a Universal Life policy, the policyowner may adjust all of the
following EXCEPT:
A. Premium amount
B. Death benefit
C. Investment performance of the policy
D. Frequency of premium payments
ANSWER>>: ✓C
RATIONALE: Policyowners of Universal Life policies can adjust
premiums and death benefits within limits, but investment
performance depends on insurer’s general account earnings, not
owner control.
QUESTION>> 8:
Which of the following statements about Variable Life insurance is
TRUE?
A. Cash value is guaranteed by the insurer
B. The policyowner assumes investment risk
C. Premiums may vary based on market conditions
D. It is not considered a security
ANSWER>>: ✓B
RATIONALE: Variable Life insurance links cash value to separate
account investments; policyowners assume investment risk and must
hold a securities license to sell such policies.
QUESTION>> 9:
Which nonforfeiture option provides the same face amount as the
original policy for a limited time?
A. Cash surrender
B. Reduced paid-up
, C. Extended term
D. Automatic premium loan
ANSWER>>: ✓C
RATIONALE: The extended term option converts the policy’s cash
value to a term policy of equal face amount for a limited duration.
Reduced paid-up provides a smaller permanent policy.
QUESTION>> 10:
What are the living benefits of whole life insurance?
Answer>>
Loan values
Question>> 1
When does an adjustable life policy accumulate cash value?
Answer>>
When premiums are paid at more than the cost of the policy
Question>> 2
When would a 20-pay whole life policy endow?
Answer>>
When the insured reaches age 100
Question>> 3
A policy states that the insurer will pay a specified face amount if the
insured dies within the 20-year premium paying period and nothing if
he dies after. What type of policy is this?
Answer>>
20-year level term
Question>> 4
What type of life insurance policy provides permanent protection?
Answer>>
Whole life
Question>> 5
