Life Insurance✓ Verified · outline & fact-checked · Sep 2026Difficulty 3/5
An insured takes up skydiving after the policy was issued, and the insurer adds a hazardous avocation exclusion endorsement to exclude that activity. If the policy is cancelled or the excluded coverage is dropped because of the hazardous activity, which result generally applies?
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
When a policy excludes coverage for a dangerous hobby or occupation through an endorsement, and the insured decides to give up or lose that coverage, the insurer generally refunds the premiums paid for the excluded coverage. The exclusion narrows the risk, so continuing to hold premium for excluded protection would be unjust enrichment. This principle is part of the exclusion rules in objective LIFE-II.E.11.
Why the other options are wrong
- B) Keeping all premiums would make the insurer richer for coverage it no longer provides.
- C) The policy does not automatically become paid up; the coverage simply loses the excluded benefit with a premium adjustment.
- D) The whole point of the endorsement is that death from the excluded activity is not covered.
Memory hook
Excluded hobby, premium refunded. No coverage, no payment, no keeping the money.