Arkansas Life and Health Insurance Practice Exam

Question: 1 / 400

Which of the following statements regarding nonforfeiture provisions in life insurance policies is true?

An insurer may defer payouts for up to 3 months

The correct answer is A because it is true that an insurer may defer payouts for up to 3 months. This ensures that the insurance company has a reasonable timeframe to process and distribute the funds to the policyholder, especially in situations where there might be administrative delays or verification processes required. Nonforfeiture provisions are designed to protect the policyholder's interests in cases where the policy lapses, ensuring that some benefits are still available even if the premium payments cease.

Options B, C, and D are incorrect. Option B is incorrect because the insurer cannot defer payments of any cash surrender value for up to 6 months. Option C is incorrect because nonforfeiture benefits are available before the policy lapses. Option D is incorrect because nonforfeiture provisions are not exclusive to term life insurance; they are also found in other types of life insurance policies.

Get further explanation with Examzify DeepDiveBeta

An insurer may defer payments of any cash surrender value for up to 6 months

Nonforfeiture benefits are only available if the policy has lapsed

Only term life insurance includes nonforfeiture provisions

Next Question

Report this question

Subscribe

Get the latest from Examzify

You can unsubscribe at any time. Read our privacy policy