Idaho life provisions, riders and options practice questions
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Section II of the Idaho Life exam's general part, Life Provisions, Riders, Options, and Exclusions, has 15 of the 50 general questions. [1] The outline lists policy riders (waiver of premium and waiver of monthly deduction, guaranteed insurability, payor benefit, accidental death and/or accidental death and dismemberment, term riders, other insureds, long term care, return of premium, disability, cost of living), policy provisions and options (entire contract, insuring clause, free look, consideration, owner's rights, beneficiary designations, premium payment, reinstatement, policy loans, withdrawals and partial surrenders, non-forfeiture options, dividends and dividend options, incontestability, assignments, suicide, misstatement of age and gender, settlement options, accelerated death benefits) and policy exclusions (war, aviation, dangerous occupation). [1]
Our Idaho life flashcards cover Idaho's grace period, incontestability, reinstatement and free look. This page covers the other Idaho Code rules behind section II, with 10 practice questions.
Dividends (Idaho Code 41-1908)
A participating policy must provide that, beginning no later than the end of the third policy year, the insurer will each year determine and apportion any divisible surplus. A dividend is payable in cash or applied to another dividend option the policy offers. If the policy offers other options, it must say which one takes effect automatically if the owner does not choose. If the policy sets a time to choose, it must be at least thirty days after the dividend is due. [2]
Policy loans (Idaho Code 41-1909)
After three full years' premiums have been paid, once the policy has a cash surrender value and while no premium is in default beyond the grace period, the insurer will lend up to the policy's loan value on the sole security of the policy. [3] For policies issued on or after July 1, 1982, the policy must provide either a maximum loan rate of not more than eight per cent a year or an adjustable maximum rate. [3] An adjustable rate is set at least once every twelve months but not more often than once every three months, and no policy may terminate in a policy year solely because of a rate change in that year. [3]
Settlement of proceeds (Idaho Code 41-1910, 41-1930, 41-1931)
- If proceeds may be paid in installments that are known when the policy is issued, the policy must include a table showing the guaranteed installments. [4]
- A life insurer may hold policy proceeds under an agreement with the policyholder, or with the beneficiaries if the policyholder made no agreement. It does not have to keep those funds separate from its general assets. [5]
- In figuring the amount due, the insurer may deduct unpaid premiums for the current policy year and any unpaid policy loan with accrued interest. [6]
Reinstatement and contestability (Idaho Code 41-1929)
A reinstated policy may be contested for fraud or material misrepresentation in the reinstatement only for the same period, and with the same conditions, as the policy allows after original issue. A reinstated policy may also exclude or restrict liability to the same extent it could have when first issued. [7]
Riders and the standard provisions
Idaho's standard provisions for individual life policies do not apply to provisions on disability benefits or on additional benefits for accidental death. [8] The incontestability provision likewise excludes disability and accidental death benefit provisions. [9]
Practice questions
1. By when must an Idaho participating policy start apportioning divisible surplus?
A. End of the first policy year
B. End of the second policy year
C. End of the third policy year
D. End of the fifth policy year
Answer: C. (Idaho Code 41-1908(1)) [2]
2. The owner of a participating policy never picks a dividend option. What happens?
Answer: The option the policy names as automatic takes effect. (41-1908(1)(b)) [2]
3. If a policy limits the time to choose a dividend option, what is the shortest time allowed?
Answer: Thirty days after the dividend is due and payable. (41-1908(1)(b)) [2]
4. A policy uses an adjustable maximum loan rate. How often must the rate be determined?
Answer: At regular intervals at least once every twelve months, but not more often than once in any three month period. (41-1909(2)(e)) [3]
5. What fixed maximum loan rate may a policy issued after July 1, 1982 state?
Answer: Not more than eight per cent a year. (41-1909(2)(a)) [3]
6. The adjustable loan rate rises mid year. Can the policy terminate in that year only because of the change?
Answer: No. (41-1909(2)(g)) [3]
7. A policy lets proceeds be paid in installments known at issue. What must it include?
Answer: A table showing the amounts of the guaranteed installments. (41-1910) [4]
8. The insured dies with an unpaid policy loan. What may the insurer deduct from the death benefit?
Answer: The principal and accrued interest of the loan, plus any unpaid premium for the current policy year. (41-1931) [6]
9. A policy was reinstated six months ago, and the insurer finds a material misstatement in the reinstatement application. Can it contest?
Answer: Yes, for the same period after reinstatement that the policy allows after original issue. (41-1929(1)) [7]
10. Does the two year incontestability provision apply to an accidental death benefit rider?
Answer: No. Provisions for disability benefits and additional accidental death benefits are excluded. (41-1905) [9]
Study tips for section II
- Numbers to keep: third policy year for dividends, at least thirty days to choose, three full years for loans, eight per cent fixed loan maximum.
- Remember what comes out of a death claim: current year unpaid premium and any loan with interest.
- The outline also lists riders such as waiver of premium, guaranteed insurability and payor benefit, and settlement options. [1]
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Sources
Laws and exam documents quoted as of October 2026.
- Pearson VUE, Idaho content outlines 121301 (effective July 31, 2025): https://www.pearsonvue.com/content/dam/VUE/vue/en/documents/publications/121301.pdf
- Idaho Code 41-1908: https://legislature.idaho.gov/statutesrules/idstat/Title41/T41CH19/SECT41-1908/
- Idaho Code 41-1909: https://legislature.idaho.gov/statutesrules/idstat/Title41/T41CH19/SECT41-1909/
- Idaho Code 41-1910: https://legislature.idaho.gov/statutesrules/idstat/Title41/T41CH19/SECT41-1910/
- Idaho Code 41-1930: https://legislature.idaho.gov/statutesrules/idstat/Title41/T41CH19/SECT41-1930/
- Idaho Code 41-1931: https://legislature.idaho.gov/statutesrules/idstat/Title41/T41CH19/SECT41-1931/
- Idaho Code 41-1929: https://legislature.idaho.gov/statutesrules/idstat/Title41/T41CH19/SECT41-1929/
- Idaho Code 41-1903: https://legislature.idaho.gov/statutesrules/idstat/Title41/T41CH19/SECT41-1903/
- Idaho Code 41-1905: https://legislature.idaho.gov/statutesrules/idstat/Title41/T41CH19/SECT41-1905/