17 Free Nevada Life & Health Practice Questions: Life Insurance Provisions, Riders and Exclusions (2026)
How to Use This Provisions and Riders Set
Life provisions, riders, options and exclusions are the second topic of the Life-General section of the Nevada Life and Health exam: 15 of its 50 scored items, the same weight as policy types. They are the contract mechanics: the clauses written into a life policy, the riders that add benefits, and the options the owner and the beneficiary choose from.
These 17 questions come from LanePrep's Nevada Life & Health quiz bank (chapter 3). They run from reading a clause and naming it, through riders and settlement and dividend options, to the situations where the grace period and the waiver of premium actually matter.
Group provisions by their job. Some clauses define the contract (insuring, consideration, entire contract), some protect the owner (grace period, incontestability) and riders add benefits. The wrong answers usually belong to the wrong group.
Practice Questions 1-6: Clauses, the Grace Period, Incontestability and Core Riders
These questions ask you to name a clause from its wording and to know the extra time a late premium buys, the clause that limits challenges to the application, a settlement option for a beneficiary, and the riders for Universal Life and for added term coverage.
Question 1 (Chapter 3)
Maria purchased a Universal Life insurance policy. She later became totally disabled due to an accident and is unable to work. She wants to ensure that her policy's cash value is not depleted by ongoing charges while she is disabled. Which rider would prevent the monthly deductions for the cost of insurance and policy expenses from being taken from her cash value during her disability?
- A) Waiver of Monthly Deduction rider
- B) Waiver of Premium rider
- C) Disability Income rider
- D) Cost-of-Living rider
Show answer & explanation
Answer: A
The Waiver of Monthly Deduction rider is specific to Universal Life and similar flexible premium policies. It waives the monthly deductions for the cost of insurance and policy expenses if the insured becomes totally disabled, protecting the policy's cash value. The Waiver of Premium rider waives premium payments for traditional policies. A Disability Income rider would pay a monthly income, not waive policy charges. A Cost-of-Living rider adjusts the death benefit for inflation.
Question 2 (Chapter 3)
Upon reviewing his new life insurance policy, Robert notices a section that states, 'The ABC Insurance Company, in consideration of the application and the payment of premiums, promises to pay the death benefit to the named beneficiary upon receipt of due proof of the insured's death.' What policy provision is this an example of?
- A) Consideration Clause
- B) Entire Contract Clause
- C) Settlement Option
- D) Insuring Clause
Show answer & explanation
Answer: D
The Insuring Clause is the insurer's basic promise to pay the death benefit to the beneficiary upon the insured's death, provided premiums have been paid and the policy is in force. It's the core promise of the contract. The Consideration Clause specifies what each party gives. The Entire Contract Clause defines what documents constitute the agreement. Settlement Options describe how the death benefit will be paid.
Question 3 (Chapter 3)
After missing his life insurance premium payment, Michael receives a notice from his insurer stating that he has an additional 31 days to pay the premium before the policy lapses. What policy provision is providing Michael with this extra time?
- A) Reinstatement provision
- B) Automatic Premium Loan
- C) Non-forfeiture option
- D) Grace Period
Show answer & explanation
Answer: D
The Grace Period is a specified period (typically 30 or 31 days) after the premium due date during which the policy remains in force, even if the premium has not been paid. If the insured dies during this period, the death benefit is paid, minus any unpaid premium. Reinstatement applies to lapsed policies. Automatic Premium Loan uses cash value to pay premiums. Non-forfeiture options apply when the policy lapses after the grace period.
Question 4 (Chapter 3)
Two years after issuing a life insurance policy, the insurer discovers that the insured made a material misrepresentation on the application regarding a pre-existing health condition. Which policy provision would likely prevent the insurer from voiding the policy based on this discovery?
- A) Incontestability Clause
- B) Entire Contract Clause
- C) Consideration Clause
- D) Grace Period
Show answer & explanation
Answer: A
The Incontestability Clause states that after a policy has been in force for a specified period (usually two years from the issue date), the insurer cannot contest its validity or deny a claim based on material misrepresentations in the application, except for non-payment of premiums or fraud in some cases. The Entire Contract Clause defines the policy documents. The Consideration Clause outlines the exchange of value. The Grace Period is for late premium payments.
Question 5 (Chapter 3)
Janet is the beneficiary of her late husband's life insurance policy. She wants the death benefit to be paid out in regular installments over a fixed period, rather than as a lump sum. Which settlement option should she choose?
- A) Fixed Period Installments
- B) Interest Only
- C) Fixed Amount Installments
- D) Life Income
Show answer & explanation
Answer: A
The Fixed Period Installments settlement option pays the death benefit in equal installments over a specified period of time. The amount of each installment is determined by the death benefit, the interest rate, and the chosen period. Interest Only pays only the interest, leaving the principal. Fixed Amount Installments pays a specific amount until the fund is exhausted. Life Income pays installments for the remainder of the beneficiary's life.
Question 6 (Chapter 3)
Jennifer purchased a 20-year level term rider to add to her existing whole life policy. What is the primary purpose of this rider?
- A) To provide additional death benefit coverage for a specific period at a lower cost than a separate policy.
- B) To allow Jennifer to purchase additional permanent coverage without evidence of insurability.
- C) To ensure that premiums are waived if Jennifer becomes disabled.
- D) To provide a monthly income benefit if Jennifer becomes disabled.
Show answer & explanation
Answer: A
A Term rider adds temporary, additional death benefit coverage to a permanent life insurance policy for a specified period, typically at a lower cost than purchasing a separate term policy. This allows the policyowner to increase coverage during times of higher need (e.g., while raising children or paying a mortgage). Option B describes a Guaranteed Insurability rider. Option C describes a Waiver of Premium rider. Option D describes a Disability Income rider.
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Practice Questions 7-12: Beneficiaries, Premium Modes, Dividends, Assignments and Settlement Options
Here the question is who gets paid and how: a return-of-premium rider, primary and contingent beneficiaries, why monthly premiums cost more than annual ones, dividend options, absolute assignments and the fixed-amount settlement option.
Question 7 (Chapter 3)
Lisa purchased a 20-year term life insurance policy. She wants to ensure that if she outlives the term of the policy, she will receive all of her paid premiums back. Which rider would provide this feature?
- A) Return of Premium rider
- B) Guaranteed Insurability rider
- C) Waiver of Premium rider
- D) Accidental Death Benefit rider
Show answer & explanation
Answer: A
A Return of Premium rider is an optional feature on some term life insurance policies that guarantees a refund of all premiums paid if the insured outlives the policy term. Guaranteed Insurability (B) allows for future coverage increases. Waiver of Premium (C) waives premiums during disability. Accidental Death Benefit (D) pays extra for accidental death.
Question 8 (Chapter 3)
Sarah has a permanent life insurance policy and wants to add coverage for her spouse, John, on the same policy, but for a limited time and at a lower cost than a separate policy. Which rider would be most suitable for this purpose?
- A) Waiver of Premium rider
- B) Children's Term rider
- C) Accidental Death Benefit rider
- D) Spouse Term rider
Show answer & explanation
Answer: D
A Spouse Term rider (a type of Other-Insured rider) provides temporary life insurance coverage for the insured's spouse, usually for a specified period or until a certain age, and is typically added to the primary insured's permanent policy. Waiver of Premium is for the primary insured's disability. Children's Term is for children. Accidental Death Benefit is for accidental death of the primary insured.
Question 9 (Chapter 3)
Sarah has a new life insurance policy and is choosing her premium payment mode. She notices that paying her premiums annually results in a lower total cost over the year compared to paying monthly. What is the reason for this difference in cost?
- A) Annual payments incur higher administrative fees.
- B) Insurers prefer monthly payments for better cash flow.
- C) Monthly payments include an interest charge for the convenience.
- D) Annual payments offer a discount due to reduced risk of lapse.
Show answer & explanation
Answer: C
When premiums are paid more frequently than annually (e.g., monthly, quarterly, semi-annually), insurers typically add a small interest charge to compensate for the lost interest income they would have earned if the full annual premium had been paid upfront. This makes the total cost of monthly payments higher than annual payments. Options A and B are incorrect. Option D is partially true in terms of risk, but the primary reason for the cost difference is the interest charge.
Question 10 (Chapter 3)
Robert owns a participating whole life insurance policy and receives annual dividends. He prefers to receive an immediate, direct payment from the insurer each year. Which dividend option should he choose?
- A) Paid-Up Additions
- B) Accumulate at Interest
- C) Cash Payment
- D) Reduce Premium
Show answer & explanation
Answer: C
The Cash Payment dividend option allows the policyowner to receive the annual dividend as a direct payment from the insurer. Paid-Up Additions (A) uses dividends to buy additional small policies. Accumulate at Interest (B) leaves dividends with the insurer to earn interest. Reduce Premium (D) uses dividends to offset future premium payments.
Question 11 (Chapter 3)
Mr. Smith, the policyowner, decides to permanently transfer all rights of ownership of his life insurance policy to his daughter, without any conditions. What type of assignment is this?
- A) Collateral assignment
- B) Absolute assignment
- C) Temporary assignment
- D) Revocable assignment
Show answer & explanation
Answer: B
An absolute assignment is a permanent and complete transfer of all policy rights from the policyowner to another party. The original policyowner gives up all control. A collateral assignment (A) is a temporary transfer of rights, typically as security for a loan.
Question 12 (Chapter 3)
Mr. Chen is the beneficiary of his sister's life insurance policy. He wants to receive the death benefit in equal, regular payments until the entire principal and interest are exhausted, regardless of how long that takes. Which settlement option should he choose?
- A) Fixed Period Option
- B) Fixed Amount Option
- C) Interest Only Option
- D) Life Income Option
Show answer & explanation
Answer: B
The Fixed Amount Option pays out a specified amount at regular intervals until the principal and interest are depleted. The length of time the payments will last depends on the amount chosen. The Fixed Period Option (A) pays out over a predetermined period. Interest Only (C) pays only the interest. Life Income (D) pays for the beneficiary's lifetime.
Practice Questions 13-17: Waiver of Premium, Accidental Death Benefits, the Grace Period Again and Dividends
The last five questions cover how long a waiver of premium rider takes to start and how disability is defined for it, what an accidental death and dismemberment rider pays for the loss of a hand, what happens to a death claim inside the grace period, and what is true of participating-policy dividends.
Question 13 (Chapter 3)
Robert added a Waiver of Premium rider to his life insurance policy. If he becomes totally disabled, how long must he typically wait before the waiver of premium benefits begin?
- A) Immediately
- B) 30 days
- C) 3 months
- D) 6 months
Show answer & explanation
Answer: D
Most Waiver of Premium riders include a waiting period, typically 6 months, before the benefits begin. If the insured is still disabled after this period, premiums are waived, and any premiums paid during the waiting period are usually refunded. Options A, B, and C are incorrect waiting periods for this rider.
Question 14 (Chapter 3)
Maria has an Accidental Death and Dismemberment (AD&D) rider on her life insurance policy. If she loses one hand in an accident, what benefit would she typically receive?
- A) The full principal sum (death benefit)
- B) One-half of the principal sum (capital sum)
- C) A refund of all premiums paid
- D) No benefit, as it only covers death
Show answer & explanation
Answer: B
An AD&D rider typically pays the full principal sum (death benefit) for accidental death. For dismemberment, such as the loss of one limb or sight in one eye, it usually pays a 'capital sum,' which is one-half of the principal sum. Option A is for accidental death. Options C and D are incorrect for dismemberment benefits.
Question 15 (Chapter 3)
Michael missed his life insurance premium payment, but his policy is still within its 31-day grace period. If Michael dies during this grace period without having paid the premium, how will the death benefit typically be handled?
- A) The policy will lapse, and no death benefit will be paid.
- B) The full death benefit will be paid, and the missed premium will be waived.
- C) The death benefit will be paid, minus the overdue premium.
- D) The beneficiary will be required to pay the overdue premium before receiving the death benefit.
Show answer & explanation
Answer: C
If the insured dies during the grace period, the death benefit is typically paid to the beneficiary, but the overdue premium is deducted from the death benefit amount. The policy does not lapse (A) during the grace period. The premium is not waived (B), and the beneficiary is not required to pay it directly (D) before receiving the benefit; it's simply subtracted from the payout.
Question 16 (Chapter 3)
Mr. Thompson owns a participating whole life insurance policy. Each year, he receives a statement indicating a 'dividend' from the insurer. Which statement is generally TRUE regarding these dividends?
- A) Dividends are guaranteed payments and are taxable as ordinary income.
- B) Dividends represent a return of unneeded premium and are not guaranteed.
- C) Dividends are considered taxable investment gains from the policy's cash value.
- D) Dividends are paid only if the policy reaches its maturity date.
Show answer & explanation
Answer: B
Dividends from a participating life insurance policy are not guaranteed; they are declared by the insurer's board of directors and reflect the company's favorable mortality experience, investment earnings, and expense control. They are generally considered a return of unneeded premium and are therefore not taxable income until the total dividends received exceed the total premiums paid. They are not investment gains and are not tied to policy maturity.
Question 17 (Chapter 3)
Mr. Johnson has a life insurance policy with a Waiver of Premium rider. He suffers a severe injury that leaves him unable to perform the duties of his occupation. For the Waiver of Premium benefit to activate, what is the typical definition of 'total disability' that he must meet?
- A) Inability to perform the duties of his own occupation for a short period.
- B) Inability to perform the duties of any occupation for which he is reasonably suited by education, training, or experience.
- C) Inability to perform any work whatsoever, even part-time or light duty.
- D) Inability to perform at least two Activities of Daily Living (ADLs).
Show answer & explanation
Answer: B
For a Waiver of Premium rider, 'total disability' is typically defined as the inability to perform the duties of any occupation for which the insured is reasonably suited by education, training, or experience. Some policies might use an 'own occupation' definition for an initial period (e.g., the first two years), but for long-term waiver of premium, it usually shifts to the 'any occupation' standard. Inability to perform ADLs is a trigger for long-term care benefits, not typically for waiver of premium.
The Mistakes That Cost Marks
Treating every waiver the same. A waiver of premium rider stops the premiums on a traditional policy once the insured is totally disabled and the waiting period, typically six months, has passed. A waiver of monthly deduction rider does the equivalent job for a Universal Life policy by keeping the monthly charges from draining the cash value. A disability income rider pays an income and waives nothing (questions 1, 13 and 17).
Forgetting the definition of total disability. For a waiver of premium rider the typical test is the inability to perform the duties of any occupation for which the insured is reasonably suited by education, training or experience (question 17).
Swapping fixed period and fixed amount. Under a fixed period option the time is set and the payment follows from it. Under a fixed amount option the payment is set and the time depends on how long the fund lasts (questions 5 and 12).
Assuming a policy lapses the day after a missed premium. During the grace period the policy stays in force. If the insured dies in that window the death benefit is paid, less the overdue premium (questions 3 and 15). A Nevada life policy's grace period is 30 days or, at the insurer's option, one month of not less than 30 days (NRS 688A.060).
Misreading incontestability. After the contestable period the insurer cannot void the policy over a misstatement on the application. In Nevada the period runs not more than 2 years from issue during the insured's lifetime (NRS 688A.080; question 4).
Calling dividends guaranteed. Participating-policy dividends are not guaranteed and are generally treated as a return of unneeded premium. The owner chooses among cash, reducing premium, paid-up additions and accumulating at interest (questions 10 and 16).
Mixing up assignments. An absolute assignment transfers every ownership right permanently, while a collateral assignment is a temporary transfer that secures a loan (question 11).
Your Next Step
Mark the ones you missed, then continue with life underwriting, applications and retirement concepts, the last block of the Life-General section. For the rest of the course, start from the free Nevada Life & Health practice questions page. To hear the material rather than read it, open the free course preview.
Item counts and weights come from Pearson VUE's Nevada Insurance Content Outlines. Read October 2026.
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