Florida Life and Health Insurance License Practice Test

In a life insurance policy, what is the feature called that states the policy will not cover certain risks?

1. Beneficiary clause

2. Incontestability

3. Exclusion

4. Conversion privilege

The correct answer is: Exclusion

The feature in a life insurance policy that states the policy will not cover certain risks is called an exclusion. This feature allows insurance companies to limit their liability and avoid paying out claims for specific circumstances that are deemed high-risk or not within the scope of the policy. Options such as A, B, and D do not fulfill this function in a life insurance policy. A beneficiary clause designates who will receive the insurance proceeds upon the death of the policyholder, not the risks covered by the policy. Incontestability refers to a clause that prevents an insurance company from canceling a policy due to a misstatement or omission on the application after a certain period of time. A conversion privilege allows the policyholder to convert their policy to a different type or form of insurance, but it does not address covered risks.