New Jersey Life Producer Practice Exam

An amendment to a life insurance policy that changes terms is known as what?

1. Rider

2. Modification

3. Endorsement

4. Supplement

The correct answer is: Modification

The term that specifically refers to an amendment to a life insurance policy that changes its terms is "modification." Modifications are made to alter the original contract, whether it be adjusting coverage amounts, terms, or conditions of the policy. In insurance, a rider is typically an additional provision added to a policy that provides extra benefits or coverage but is not the primary method for changing terms of the existing contract. An endorsement is often seen as a more formal addition or amendment to a document, which can sometimes overlap with the concept of a modification but does not specifically imply a change to the core terms of the policy. A supplement is generally regarded as supplementary information or additional materials provided along with the policy, rather than a direct change to its terms. Thus, identifying "modification" underscores the precise action taken to alter the foundational aspects of the life insurance policy.