California Life & Health: Life Insurance Policy Provisions, Riders & Options

Correct

The answer is B: Per Capita

Per capita means 'by the head': the death benefit is divided equally among the members of the class who are alive when the insured dies (Emily and Michael, in this case). Per stirpes means 'by the branch': a deceased beneficiary's share passes to that beneficiary's descendants instead of to the surviving members of the class. Irrevocable refers to the owner's inability to change the beneficiary without consent, and testamentary refers to a will.

Reviewed in our October 2026 California fact-check.

Correct

The answer is B: No-Lapse Guarantee Rider

A No-Lapse Guarantee Rider is specifically designed for universal life policies. It ensures that the policy remains in force for a specified period, typically as long as a minimum premium is paid, regardless of whether the cash value is sufficient to cover policy charges. This provides a safety net against market downturns affecting the cash value. Waiver of Monthly Deduction is for disability, Guaranteed Insurability allows future coverage increases, and Cost of Living increases the death benefit with inflation.

Reviewed in our October 2026 California fact-check.

Correct

The answer is A: Cash.

The cash dividend option pays the dividend to the policyowner, usually by check, so it is available as spendable money. Paid-up additions use the dividend to buy small amounts of fully paid-up additional insurance. Reduced premium applies the dividend toward the next premium. One-year term uses the dividend to buy one-year term insurance.

Reviewed in our October 2026 California fact-check.

Correct

The answer is A: The insurer holds the death benefit and pays only the interest earned to the beneficiary.

Under the Interest Only option, the insurer retains the principal and pays the beneficiary the interest earned. This is often chosen when the owner wants the principal preserved for a later date or a different beneficiary.

Reviewed in our October 2026 California fact-check.

Correct

The answer is B: Spendthrift clause

The Spendthrift clause protects the death benefit proceeds from the claims of the beneficiary's creditors and prevents the beneficiary from commuting or assigning the benefits.

Reviewed in our October 2026 California fact-check.