Rhode Island Life Insurance Practice Exam

What is the primary promise made by an insurer in a life insurance contract?

1. Beneficiary Designation

2. Policy Value

3. Insuring Agreement

4. Claim Payment

The correct answer is: Insuring Agreement

The primary promise made by an insurer in a life insurance contract is encapsulated in the insuring agreement. This component of the contract contains the insurer's commitment to provide a death benefit to the designated beneficiary upon the insured's death, as long as the policy has been in force and premiums have been paid. It clearly outlines the scope of coverage, detailing the conditions under which the insurer will pay out the benefit. The insuring agreement is fundamental because it sets the stage for what the policyholder can expect from the insurer in terms of financial protection. This assurance is crucial in life insurance, as it serves to fulfill the financial needs of the beneficiaries deceased policyholder, offering them security during a difficult time. While beneficiary designation, policy value, and claim payment are all important aspects of life insurance, they do not represent the core promise made in the contract. The beneficiary designation specifies who will receive the benefit, the policy value indicates the monetary worth of the policy over time, and claim payment refers to the execution of the insuring agreement upon the occurrence of the insured event. However, the insuring agreement is the foundational promise upon which these other elements rest.