Arkansas Life and Health Insurance Practice Exam

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Prepare for the Arkansas Life and Health Insurance Exam. Utilize flashcards and multiple-choice questions with hints and explanations for each question. Get thoroughly ready for your certification test!

Each practice test/flash card set has 50 randomly selected questions from a bank of over 500. You'll get a new set of questions each time!

Practice this question and more.

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

An insurer may defer payouts for up to 3 months
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

The correct answer is: 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.