Insurance Licensing Ok-Life-Accident-and-Health-or-Sickness-Producer Questions Answers

A collateral assignment is a provision in a life insurance policy that allows the policyowner to temporarily transfer certain ownership rights (e.g., the right to the death benefit or cash value) to a creditor as security for a loan. The assignee (creditor) has a claim to the policy proceeds up to the loan amount, but the policyowner retains other rights and regains full ownership once the loan is repaid.

Option A: Incorrect. Reinstatement allows a lapsed policy to be restored under certain conditions, not related to securing a loan.

Option B: Incorrect. The entire contract provision defines the policy and application as the complete agreement, not related to loans.

Option C: Correct. Collateral assignment temporarily assigns policy rights to secure a loan, as per standard life insurance provisions.

Option D: Incorrect. An automatic premium loan uses the policy’s cash value to pay overdue premiums, not to secure an external loan.

This question is part of the Prometric content outline under “Provisions, Options, Exclusions, Riders, Clauses, and Rights,” which covers ownership and assignment provisions.

In aterm life insurance policy, premiums are typicallylevelduring the policy term (e.g., 10, 20 years), meaning they remain constant. At renewal, premiums may increase based on the insured’s attained age, but during the initial term, they are fixed, as outlined in Oklahoma’s life insurance regulations (Title 36 O.S. § 4002).

Option A: Incorrect. Convertible refers to a policy’s ability to convert to permanent insurance, not premium structure.

Option B: Correct. Premiums are level during the term prior to renewal.

Option C: Incorrect. Variable premiums apply to certain flexible policies like universal life, not term.

Option D: Incorrect. Adjustable premiums are not a standard term for level term policies.

A life insurance policyowner has several rights, including assigning or transferring the policy (e.g., through absolute or collateral assignment), borrowing against the cash value (in policies with cash value), and selecting or changing the beneficiary, as outlined in Oklahoma’s Insurance Code (Title 36 O.S. § 4001 et seq.). However, anabsolute assignmenttransfers all ownership rights to the assignee, and the original policyowner cannot unilaterally revoke it without the assignee’s consent, as it is a complete transfer of ownership.

Option A: Incorrect (is a right). The policyowner can assign or transfer the policy to another party.

Option B: Incorrect (is a right). The policyowner can borrow against the cash value in policies like whole life or universal life.

Option C: Incorrect (is a right). The policyowner can select and change the beneficiary unless restricted (e.g., irrevocable beneficiary).

Option D: Correct (is not a right). An absolute assignment cannot be revoked by the original policyowner without the assignee’s agreement.

This question aligns with the Prometric content outline under “Provisions, Options, Exclusions, Riders, Clauses, and Rights,” which covers policyowner rights and assignments.

Credit and accident disability insuranceis designed to make loan payments or pay off a loan balance if the insured becomes disabled due to an accident or sickness, ensuring financial obligations are met. This is a specialized product in Oklahoma (Title 36 O.S. § 4101 et seq.).

Option A: Incorrect. Income replacement is the purpose of disability income insurance, not credit disability.

Option B: Correct. The plan helps pay off a loan during disability.

Option C: Incorrect. Paying medical or dental premiums is not the purpose of credit disability insurance.

Option D: Incorrect. Legal actions are unrelated to credit disability plans.