Texas Life Agent Practice Exam

The clause that confirms the insurer's commitment to pay benefits is referred to as what?

1. Beneficiary Clause

2. Insuring Clause

3. Payment Clause

4. Settlement Clause

The correct answer is: Insuring Clause

The clause that confirms the insurer's commitment to pay benefits is known as the Insuring Clause. This clause is a fundamental component of an insurance policy, clearly outlining the insurer's obligation to provide coverage and the conditions under which benefits will be paid. It establishes the parameters of the contract, detailing what types of losses or events are covered and ensuring the policyholder understands what protection they are receiving. By clearly stating the insurer's responsibilities, the Insuring Clause helps to provide transparency and builds trust between the insurer and the insured, which is essential for the establishment of an effective insurance relationship. This clause is foundational because, without it, the purpose of the policy—providing financial protection—would not be adequately defined.