Aflac - Chaper 5

Front 1

Insuring Clause

Back 1

The insurer’s basic promise to pay benefits in the event of a covered loss.

Front 2

Consideration Clause

Back 2

A policy owner must pay a premium in exchange for the
insurer’s promise to pay benefits.

Front 3

Execution Clause

Back 3

The policy is executed when all parties to the contract have met the policy’s conditions.

Front 4

Entire Contract

Back 4

The insurance policy itself (including any riders and endorsements/amendments) and the application, if attached to the policy, comprise the entire contract between all parties. Insurance producers cannot make changes to a policy. Only an authorized officer of the insurer is permitted to make changes to the contract.

Front 5

Payment of Premiums

Back 5

Stipulates when premium payments are due, how and to whom they must be paid.

Front 6

Grade Period

Back 6

The stipulated period of time policyowners are allotted to pay an overdue premium during which the policy remains in force.

Front 7

Reinstatement

Back 7

Permits the policy owner to reinstate a policy that has lapsed as long as the policyowner can provide a proof of insurability

Front 8

Incontestable Clause

Back 8

Prevents the insurer from denying a claim or voicing a life insurance policy, except for nonpayment of premiums, after the policy has been in force for a certain number of years, usually 2

Front 9

Misstatement of age or sex

Back 9

Allows the insurer to adjust the policy benefits if the insured age or sex is misstated on the policy application

Front 10

Legal action

Back 10

Places a limit on the period in which a claimant can file suite against an insurer, usually 60 days since the insurer received proof of loss and within 2 years from the date proof of loss was submitted to the insurer

Front 11

Payment claim

Back 11

Once the insurer receives notice of the insured's death and receives the death certificate, the insurer must pay the claim within a certain number of days, usually 60

Front 12

Ownership

Back 12

Stipulates the rights of the policyowner

Front 13

Assignment Clause

Back 13

The right to transfer a policy rights to another person or entity. An absolute or complete assignment occurs when the policyowner assigns all rights including cash values to another person or entry.

Front 14

Absolute Assignment

Back 14

Absolute Assignments are make willingly, so they are also called voluntary assignments. A collateral or partial assignment is the partial and temporary transfer of rights to another person or entity.

Front 15

Collateral Assignment

Back 15

Are usually intended for securing a loan. Collateral assignments are also called conditional because in order for the assignee to receive the portion of policy proceeds assigned, there must be a balance on the loan at the time of the insured's death.

Front 16

Free Look

Back 16

A policy owner is permitted a number of days from the date the policy is delivered (usually 10 days) to look over the policy and return it if dissatisfied for any reason, for a refund of all premiums paid.

Front 17

Suicide Clause (Exclusion)

Back 17

The policy will be voided an no death benefit will be paid if the insured commits suicide within a stipulated time period, usually 1 or 2 years from the policy issuance.

Front 18

Aviation (Exclusion)

Back 18

The insurer will not pay the claim if the insured dies due to involvement with aviation such as military pilot flying a jet aircraft

Front 19

Status Clause (exclusion)

Back 19

The insurer will not pay the claim if the insured dies while in active military service

Front 20

Results Clause (Exclusion)

Back 20

The insurer will not pay the claim if the insured dies due to an act of war.

Front 21

Automatic Premium Loan

Back 21

Allows the insurer to automatically use the policy cash value to pay an overdue premium

Front 22

Excess Interest Provision

Back 22

When a life insurance policy interest rate becomes greater than the assumed interest rate, the policy will build cash value.

Front 23

Third Party Ownership

Back 23

The three parties to the contract are the policyowner, insured and insurer. The policy owner must have an insurable interest in the life of the insured.

Front 24

Succession (Beneficiary)

Back 24

The policy owner may name up to three levels of prioritized beneficiaries: Primary, contingent and tertiary. The beneficiaries at the lower levels of the priority don not receive policy proceeds unless the higher level beneficiaries predecease the insured.

Front 25

Revocable vs Irrevocable (Beneficiaries)

Back 25

The policy owner can change the revocable beneficiaries with their consent. However, with irrevocable beneficiaries, the policyowner must receive their written consent to exercise any ownership rights except for the right to pay premiums.

Front 26

Short Term Survivorship (Beneficiary)

Back 26

It requires that the insured and primary beneficiary's death are form unrelated caused.

Front 27

Spendthrift Clause (Beneficiary)

Back 27

It is used to prevent creditors form seizing life insurance policy proceeds provided there is at least one named beneficiary, excluding the insured's estate.

Front 28

Facility of Payment Provision (Beneficiary)

Back 28

It allows the insurer to choose a beneficiary if the insurer cannot get in contact with the named beneficiaries after a certain amount of time.

Front 29

Straight Life or Single Life - Settlement Option

Back 29

Pays the beneficiary periodic income for his entire life. Once the beneficiary dies, the payments stoop and any balance of the principals is forfeited to the insurer.

Front 30

Life income - settlement Option

Back 30

Option that uses an annuity to pay the policy proceeds. The beneficiary is provided with income that cannot be outlived: income is guaranteed for the beneficiary's entire life.

Front 31

Refund Life Option - Settlement Option

Back 31

Pay the beneficiary periodic income for entire life. If the enificiary dies before the policy proceeds have been paid out entirely, then a second beneficiary receives the payments until the principle reaches zero. Guarantees that a minimum benefit will be paid out.

Front 32

Life Income certain settlement Option

Back 32

Pays periodic payments to beneficiary for his entire life. If the beneficiary dies before a specified period in the policy has passed )(such as 10 to 15 years), then a second beneficiary will receive payments until that period ends. It guarantees that benefits will be paid out for a minimum number of years.

Front 33

Joint survivor Settlement option

Back 33

Allows two or more individuals to receive income payments for their entire lives.

Front 34

Nonforfeiture Option
1) cash surrender
2) Extended Term option
3) Reduced paid up insurance option ( purchase of paid up whole life coverage at a reduced face amount based on the amount of the policy cash value. No more premium payments are made.

Back 34

Nonforfeiture option/values are guarantees that are required by law to be part of life insurance policies that build cash value. Insurers are required to make nonforfeiture values available when policyowners discontinue premium payments for any reason.

Front 35

Participating Policies

Back 35

Pay dividends to policyowners, Dividends are the return of overcharged premiums and therefore are not taxable. Typically paid annually.

Front 36

Dividends, paid up Addition Option

Back 36

Allows the policy owner to use dividends as a single premium to purchase an additional amount of whole life coverage.

Front 37

Dividends, paid up insurance option

Back 37

Allows the policy owner to use dividends to pay up the policy earlier.

Front 38

Disability Rider - Waiver of premium rider

Back 38

Allows policy owner to waive premium payments during a disability, and keeps the policy in force. The disability must be total and permanent.. After a certain age (60 or 65) the waiver if premium rider is void.

Front 39

Disability Waiver - Waiver of Cost of Insurance

Back 39

Allows a universal life policy owner who becomes disable to waive the cost of death protection but does not waive the cost of premium required to build cash value.

Front 40

Disability Rider - Disability Income Rider

Back 40

If the policyowner becomes totally and permanently disabled, the insure will pay the insured a periodic income and in some policies it also waives the policy premiums.

Front 41

Disability Rider - Payor Rider

Back 41

If the individual paying the premium on a juvenile life policy becomes disable or dies before the insured child reaches a certain age such as 21, the policy premiums will be waived until the child reaches the specified age.

Front 42

Disability Rider - Accelerated Benefit Rider

Back 42

Allows the insured to receive a portion of the death benefit prior to death if the insured has a terminal illness.

Front 43

Disability Rider - Long Term Care Rider

Back 43

A type of accelerated benefit which is used to pay long term care costs.

Front 44

Disability Rider - Riders Covering Additional Insureds

Back 44

Riders can be attached to protect the insured spouse, children or both.

Front 45

Disability Rider - Substitute Insured Rider

Back 45

Also refered to as the exchange privilege rider. Allows the insured under a life insurance policy to be changed.

Front 46

Disability Riders - Riders Affecting the Death Benefit Amount

Back 46

Riders that modify a life insurance policy's death benefit.

Front 47

Disability Rider - Accidental Death Benefit (Multiple Indemnity)

Back 47

Pays an additional sum, termed the principal sum, to the beneficiary if the insured dies due to an accident. The amount paid is a multiple of the policy face amount such as double or triples

Front 48

Disability Waiver - Accidental Death and Dismemberment (AD&D)

Back 48

May be added to a life insurance policy. Pays benefits for dismemberment and accidental death. Pays a principal sum for the loss of both hands, both arms, both legs or loss of vision in both eyes.

Front 49

Disability Waiver - Guaranteed Insurability (future increase option)

Back 49

Permits the policy owner to buy addition permanent life insurance coverage at specific point in time in the future (marriage, birth,"",,) without requiring the insured to provide proof of insurability.

Front 50

Disability Rider - Cost of Living Rider

Back 50

Allows the policy's face amount to be adjusted to the account for inflation based on the consumer price index.