Arkansas Life and Health Insurance Practice Exam

Which type of insurance policy component states that the promise to pay benefits is contingent upon the payment of premiums?

1. Benefit Provision

2. Premium Clause

3. Consideration Clause

4. Insuring Clause

The correct answer is: Benefit Provision

The correct answer is A. Benefit Provision. The Benefit Provision component in an insurance policy states that the promise to pay benefits is contingent upon the payment of premiums. This clause outlines the types of benefits the policyholder is entitled to receive under the policy in exchange for paying the required premiums. The other options are incorrect: B. Premium Clause - The premium clause typically outlines the frequency and amount of premium payments due by the policyholder. C. Consideration Clause - The consideration clause highlights that an insurance contract is based on the exchange of consideration, where the insured pays premiums in exchange for the promise of benefits from the insurer. D. Insuring Clause - The insuring clause sets out the basic agreement between the insurer and the insured, detailing the coverage provided by the policy.