Life & Health Insurance Exam (National Portion)General InsuranceEasy
A life insurance policy includes a provision that allows the policyowner to borrow against the policy's cash value. This provision is an example of which part of a typical insurance policy structure?
- ADeclarations
- BInsuring Agreement
- CExclusions
- DConditions
Show answer & explanationAnswer & explanation
Correct answer: D. Conditions
Conditions outline the rights and obligations of both the insurer and the insured, including provisions like policy loans, surrender options, and grace periods.
Why the other options are wrong
- A. Declarations identify the insured, policy limits, and premium, not policy loan options.
- B. The Insuring Agreement states the insurer's promise to pay, not the policyowner's rights regarding cash value.
- C. Exclusions list what is NOT covered by the policy.
Policy Structure - Conditions
The section of an insurance policy that outlines the duties and rights of both the insured and the insurer.
- Defines terms for coverage to apply.
- Includes provisions like premium payment, notice of loss, policy loans.
- Often specifies what the insured must do to receive benefits.
Memory trick: D.I.C.E. - Declarations, Insuring, Conditions, Exclusions