Life License Qualification Program (LLQP) Practice Exam

What is the term for the agreement in a life insurance contract that specifies a sum of money to be paid upon the insured's death?

1. Entire Contract provision

2. Consideration clause

3. Insuring agreement

4. Assignment agreement

The correct answer is: Insuring agreement

The term that specifies a sum of money to be paid upon the insured's death is referred to as the insuring agreement. This key component of a life insurance contract outlines the promises made by the insurer to provide a benefit upon the occurrence of the insured event, which in this case is death. It details the coverage provided and the conditions under which the insurer will make the payment. In life insurance, the insuring agreement is fundamental because it establishes the insurer's obligation to pay the death benefit to the beneficiaries, thereby fulfilling the primary purpose of the policy. It highlights the relationship of reliance between the policyholder and the insurer, ensuring that both parties understand the core provisions of the policy. The other terms, while relevant in the context of insurance contracts, do not specifically pertain to the sum of money to be paid upon the insured's death. The entire contract provision refers to the notion that the policy document, along with any endorsements, constitutes the complete agreement between the insurer and the insured. The consideration clause involves the exchange of value, typically the premium payments made by the policyholder, but does not describe the death benefit itself. Lastly, the assignment agreement pertains to the transfer of policy rights from one party to another, which is unrelated to the term