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14 Cards in this Set
- Front
- Back
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What is a policy provision?
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Provisions stipulate the rights and obligations in an insurance contract.
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What constitutes the entire contract?
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The policy and a copy of the application, along with any riders or amendments, form the entire contract.
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What is the purpose of a grace period?
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To prevent unintentional policy lapse for nonpayment of premiums.
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How is a death claim handled when it is discovered that the insured misstated his or her age on the application?
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If the applicant has misstated his or her age on the application, the insurer, in the event of a claim, is allowed under this provision to adjust the benefits to an amount that the premium at the correct age would have otherwise purchased.
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What is the difference between absolute and collateral assignment?
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An absolute assignment permanently transfers all rights of ownership to another person or entity. A collateral assignment is a transfer of partial rights to another person.
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What is the free-look period, and when does it begin?
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The free-look period allows the policyowner a specified number of days from receipt to look over the policy and if dissatisfied for any reason, return it for a full refund of premium. It starts when the policyowner receives the policy, not when the insurer issues the policy.
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What happens to an unpaid policy loan at insured's death?
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If there are outstanding loans at the time of the insured's death, the amount will be considered a debt to the policy and the death benefit will be reduced by the amount of indebtedness.
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What is the purpose of the Automatic Premium Loan provision?
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It prevents the unintentional lapse of a policy due to nonpayment of the premium.
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Which rider allows the early payment of a portion of the death benefit to the insured?
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Accelerated death benefits rider
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Which riders increase the amount of the death benefit?
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Accident Death rider --- pays double or triple the amount of face value; Return of Premium --- pays back all the premium in addition to the death benefit.
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What are the 3 nonforfeiture options in life insurance policies?
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Cash surrender value, reduced paid-up insurance, or extended term option.
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Which nonforfeiture option is automatically selected if the policyowner has not made a selection?
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If the policyowner has neglected to select one of these nonforfeiture options, the insurer will automatically implement the extended term option in the event of termination of the original policy.
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Which dividend option increases the death benefit?
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Paid-up additions increase the death benefit of the original policy by whatever amount the dividend will buy.
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When do benefit payments stop under a Joint and Survivor settlement option?
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The Life Income Joint and Survivor option guarantees an income for two or more recipients for as long as they live.
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