Explanation:

A settlement option in life insurance or annuity contracts refers to how the death benefit or accumulated funds are paid out to the beneficiary or annuitant. These options are defined by the insurer and specified in the policy contract.

Let's break down the choices:

A. Fixed period
This is a valid settlement option.
The insurer pays the death benefit in equal installments over a fixed number of years (e.g., 10 or 20 years), until the entire amount is paid.
Valid option

B. Pure life income (life only)
This is another valid option, especially in annuities.
Pays income for the life of the beneficiary. Payments stop at death, even if the total paid is less than the original benefit.
Valid option

C. Asset withdrawal
This is not a standard or defined settlement option.
It sounds more like systematic withdrawals, which are more relevant to investment accounts or some flexible annuities—but not a formal "settlement option" listed in policy language.
Not a settlement option under standard insurance guidelines.

D. Life income with period certain
Pays a guaranteed income for life, and if the beneficiary dies early, it continues to pay the remainder of the "certain" period (e.g., 10 years).
Valid option

Explanation:

The Unpaid Premium Uniform Optional Provision (found in many health insurance policies) states that if a premium is unpaid when a claim becomes payable, the insurer can deduct the overdue premium from the claim amount rather than denying coverage or canceling the policy outright.

Why the Other Options Are Incorrect:
A. Claim is denied → Incorrect because the provision allows the claim to be paid (minus the unpaid premium).
B. Policy is cancelled → Incorrect because the policy remains in force; only the owed premium is withheld.
D. Claim is delayed until payment of the premium → Incorrect because the provision specifies an immediate deduction, not a delay.

Key Takeaway:
This provision protects policyholders by ensuring claims are still paid (after premium deduction) rather than denied due to late payments.

Explanation:

Janet purchased a 10-year level term life insurance policy. Let’s break that down:
"Level term" means both the premium and the death benefit (face amount) stay the same during the term of the policy.
The term is 10 years, meaning the coverage lasts for that exact period.
It is pure protection—no cash value or dividends unless specified otherwise (which it isn't here).

Analysis of the options:

A. The policy will be converted to a whole life policy at the end of the 10-year period
Incorrect
A term policy doesn’t automatically convert. It may include a conversion option, but conversion must be requested and is not automatic.
B. The face amount will remain constant as the premium increases over the 10-year period
Incorrect
In a level term policy, the premium does NOT increase. It's level, hence the name.
C. The face amount will increase as dividends on the policy accumulate over the 10-year period
Incorrect
Term life policies do not earn dividends or build cash value unless it's a special kind of term (which this isn’t).
D. The premium and the face amount will remain constant for the 10-year period
Correct
This is the definition of level term life insurance.

Explanation:

In life and health insurance underwriting, applicants are classified into risk categories based on health, lifestyle, occupation, and other factors that affect mortality or morbidity. These categories help insurers determine the appropriate premium to charge.

Definitions of Risk Categories:
A. Rating risk – ❌ Not a formal risk classification. "Rated" is a term used during underwriting (e.g., a "rated policy"), but it's not the name of a risk class.
B. Standard risk – ❌ Incorrect. A standard risk refers to individuals who meet the average health and lifestyle expectations of the insurer and are accepted at standard premium rates.
C. Preferred risk – ❌ Incorrect. These are individuals who exceed average health standards (e.g., excellent health, non-smoker, favorable family history) and qualify for lower-than-standard premiums.
D. Substandard risk – ✅ Correct. These individuals have higher risk factors due to poor health, dangerous occupations, risky hobbies, or habits (e.g., smoking). They may still be insurable, but usually at higher (rated-up) premiums, or with policy exclusions or limitations

Explanation

According to Oklahoma Statutes Title 36 §309.2, the Insurance Commissioner is required to conduct a financial examination of every domestic insurer licensed in the state at least once every five (5) years.

This ensures that insurers remain solvent and compliant with regulatory standards. The Commissioner may conduct examinations more frequently if deemed necessary based on factors like financial statement analysis, changes in management, or actuarial opinions.

Explanation:
A participating whole life insurance policy is issued by a mutual insurer and provides policyholders with a return of divisible surplus (typically in the form of dividends).

Key Features of a Participating Policy:
Dividends: Policyholders may receive dividends (not guaranteed) based on the insurer’s financial performance.
Mutual Insurer Structure: Since mutual insurers are owned by policyholders, profits may be distributed as dividends.
Flexibility: Dividends can often be taken as cash, used to reduce premiums, or purchase additional coverage.

Why the Other Options Are Incorrect:
A. Limited pay whole life → Refers to a policy where premiums are paid over a limited period (e.g., 20 years), but it doesn’t necessarily involve dividends.
C. Continuous premium whole life → Describes a policy where premiums are paid for life (no limited pay period), but again, dividends are not implied.
D. Straight whole life → A basic whole life policy with fixed premiums and benefits, but not necessarily participating (dividend-paying).

Key Takeaway:
"Participating" = Dividends possible (only in mutual insurers or some participating stock insurers).

Explanation:

In insurance, if an applicant deliberately lies (makes a false statement knowingly and intentionally) to the insurer—for example, to get a lower premium—this is classified as fraud.

Fraud involves intent to deceive and gain something of value, such as:
Lying about health conditions
Falsifying income or age
Denying tobacco or alcohol use when it’s not true

Breakdown of the Options:

A. Omission –
This refers to leaving out important information, not lying outright. It can be innocent or intentional but is not as strong as fraud unless proven deliberate.
B. Fraud –
This is a willful and intentional misrepresentation or lie, with the intent to deceive and gain unfair advantage.
Fraud is grounds for denial of a claim or voiding a policy.
C. Concealment –
This involves withholding material facts, but again, it's not the same as making a false statement.
It’s closely related to omission but less severe than proven fraud.
D. Aleatory –
This is a legal term describing insurance contracts where the value exchanged by each party is unequal and based on chance (e.g., you may pay premiums for years without a claim). It has nothing to do with dishonesty.

Explanation:

Medicare supplemental insurance (Medigap) is designed to fill gaps in Original Medicare (Parts A & B). One of the core standardized benefits across all Medigap plans (Plan A-N) is coverage for the first 3 pints of blood per year, which Medicare Part A does not fully cover.

Why the Other Options Are Incorrect:
B. At-home recovery → Only available in some older/discontinued Medigap plans (not a core benefit).
C. Basic drugs limit → Medigap does not cover prescription drugs (this is handled by Medicare Part D).
D. Preventive care → Already covered 100% by Medicare Part B (no supplemental needed).

Key Takeaway:
All Medigap plans must include the 3-pint blood benefit (per federal standardization rules).
Other benefits (e.g., skilled nursing coinsurance, foreign travel emergency) vary by plan type.

Explanation:

The Standard Nonforfeiture Law is a model regulation (adopted by most states, including Oklahoma) that protects policyowners of cash value life insurance policies — such as whole life — by guaranteeing that they will not lose the value they’ve accumulated even if they stop paying premiums.

Key Point:
If the policyowner stops paying premiums, the policy does not automatically lapse without value. Instead, the insurer must offer nonforfeiture options, which include:

1.Cash surrender value
2.Reduced paid-up insurance
3.Extended term insurance

These options allow the policyowner to retain some benefits from the policy’s accumulated cash value.

Option Analysis:

A. Stops paying the premium
Correct. This is exactly the situation that triggers the insurer’s obligation under the Standard Nonforfeiture Law to make cash value options available.

B. Is not notified within 60 days of contractual changes
There's no such rule under the Nonforfeiture Law related to notification of contractual changes within 60 days.

C. Becomes disabled
Disability does not automatically entitle the policyowner to the cash value. Disability provisions are usually handled under a waiver of premium rider, not nonforfeiture.

D. Files for bankruptcy
Bankruptcy does not trigger the nonforfeiture clause. The policyowner's rights may be affected depending on state exemption laws, but it's not the trigger event for nonforfeiture benefits.

Explanation:

In life insurance contract law, a person is considered to have an insurable interest in another’s life if they would suffer a financial loss or hardship from that person’s death. This is a legal requirement to prevent life insurance from becoming a form of gambling or speculation.

Why Option A is Correct
Insurable interest must exist at the time the policy is purchased, not at the time of death2.
It is based on a reasonable expectation of financial benefit from the continued life of the insured.
Examples include:
Spouses
Parents and children
Business partners
Creditors and debtors

Why the Other Options Are Incorrect

B. Any type of business relationship
Not all business relationships qualify. There must be a financial dependency or contractual obligation.
C. Distant family relationship
Distant relatives do not automatically qualify unless a financial interest is proven.
D. Interest exists at time of death
Insurable interest must exist at the time of policy issuance, not at death

Explanation:

In most U.S. states, the minimum legal age to enter into an insurance contract (including life and health insurance) is 18 years old. This aligns with the general age of contractual capacity (majority age) under U.S. law.

Why the Other Options Are Incorrect:
A. 15 / B. 16 → Minors (under 18) typically cannot legally bind themselves to contracts, with rare exceptions (e.g., emancipation).
D. 21 → An outdated standard; modern law uniformly uses 18 as the threshold for contractual capacity.

Key Exceptions:
Parental consent: In some states, minors may purchase insurance with a parent/guardian’s co-signature.
Married or emancipated minors may qualify as exceptions.

Explanation:

A joint life insurance policy (often called "first-to-die") covers two people (typically spouses) under a single contract and pays the death benefit upon the first death.

Key Features:
Single payout: The policy terminates after the first death.
Cost-effective: Premiums are lower than insuring both spouses separately.
Common uses: Estate planning, covering shared debts, or business partnerships.

Why the Other Options Are Incorrect:
A. Dual capacity → Not a standard insurance term.
B. Family term → Usually refers to a rider covering children, not spouses.
C. Whole life → A type of permanent insurance (not specific to joint coverage).

Comparison with "Second-to-Die":
First-to-die (joint life): Pays at the first death.
Second-to-die (survivorship life): Pays at the second death (used for estate tax planning).