Life Insurance Policy Provisions, Riders & Options

Correct

The answer is C: Accumulate at Interest.

With the accumulate at interest option, the insurer keeps the dividends on deposit and credits them with interest. The owner can usually withdraw the accumulated dividends and interest at any time. The cash option pays the dividend straight to the policyowner. Paid-up additions use the dividend to buy additional paid-up insurance. One-year term uses the dividend to buy temporary extra coverage.

Reviewed in our October 2026 California fact-check.

Correct

The answer is A: Deny the death benefit claim and refund the premiums paid, due to the war exclusion.

A war exclusion limits the insurer's liability, usually to a refund of the premiums paid, when the death results from war. Whether it applies depends on the policy's wording and the cause of death, not on the insured's status. This policy excludes death resulting from acts of war, and the insured was killed in a military attack during a declared war, so the insurer would deny the death benefit and refund the premiums. A civilian is not outside such a clause, and the insurer applies the policy's terms rather than paying a compromise amount.

Reviewed in our October 2026 California fact-check.

Correct

The answer is D: Waiver of Premium rider.

The waiver of premium rider keeps the policy in force by waiving the premiums while the insured is totally disabled (usually after a waiting period), so a disability doesn't cause the policy to lapse. The accidental death benefit rider pays an extra benefit for accidental death. Guaranteed insurability lets the owner buy more coverage later without evidence of insurability. The cost of living rider increases coverage with inflation.

Reviewed in our October 2026 California fact-check.

Correct

The answer is C: Grace period.

The grace period is a policy provision that keeps the policy in force for a period after the premium due date, during which an overdue premium can still be paid without a lapse. In California it must be not less than 60 days from the premium due date for a life insurance policy issued or delivered in the state, and it cannot run at the same time as the period of paid coverage (Insurance Code §10113.71). The contestable period concerns the insurer's right to challenge the application for misstatements. The free look is the review period after delivery. The reinstatement period is for restoring a lapsed policy.

Reviewed in our October 2026 California fact-check.

Correct

The answer is C: The insurer can rescind for the material misrepresentation and owes no death benefit.

In California, paying the first premium with the application under a conditional receipt creates temporary insurance at once, and an insurability condition ends it only when the insurer rejects the application, tells the applicant and refunds the premium (Ransom v. Penn Mutual, 1954; Smith v. Westland Life, 1975). None of that had happened before this death, so the unmet condition alone would not defeat the claim. The false answer does: the applicant said no to the smoking question while currently smoking, a misrepresentation material to the risk (Ins. Code §334), and a representation false in a material point lets the insurer rescind the contract, returning the premium, without proving intent to deceive (§359). Calling the receipt a binder doesn't change that, and paying the benefit less a premium difference is how a misstated age is handled, not a material misrepresentation.

Reviewed in our October 2026 California fact-check.