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35 Cards in this Set
- Front
- Back
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Waiver of Premium Rider |
-in case a client becomes totally disabled -keeps life policy in force even if insured can no longer pay premium -6 month waiting period -usually must be enacted before 60 |
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Guaranteed Insurability Rider |
-for younger applicants -allows insured to increase coverage at option dates (usually 5) -regardless of health (no physical exam) -rates are based upon current age at increase |
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Payor Benefit Rider |
-added to policy written on life of a child -if policy owner dies/becomes disabled, policy stays in force for child -until child turns 18 |
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Accidental Death Benefit Rider (AD&D) |
-also called multiple indemnity rider -pays double or triple face amount if insured dies of an accident -NOT sickness -must die within 90 days of accident |
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Term Insurance Rider |
-often added to whole life policy to increase coverage -especially if can't afford premium for coverage you want -term portion only covered if insured dies w/in term -eventually will expire- whole life will continue to 100 |
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Other Insurance Rider |
-when you want to add coverage to a new spouse, newborn child, etc -subject to physical exam -for child-- child term rider -type of term rider |
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Long Term Care Rider |
-can only be added to cash value policy -can take money out of policy's cash value to pay for nursing home, home health care, etc -reduces death benefit |
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Return of Premium Rider |
-also called return of premium term(ROPT) -if insured lives till end of policy period then premium returned tax free |
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Entire Contract Clause |
-defines what is admissible in court -policy+application -application MUST be attached -protects the insured from insurer making changes to the policy -must get mutual consent |
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Insuring Clause (Agreement) |
-insurance company's promise to pay -located on first page/face of the policy -insurance co. has promise that can be legally enforces |
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Free Look |
-gives insured chance to examine policy -always deliver in person -starts at policy DELIVERY -insured can deny or return policy during this time -insurer must return premiums -if returned, coverage is voided |
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Consideration Clause |
-an exchange of values -insured pays premium and provides representations -insures provides coverage in exchange -required for legal contract |
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Owner's Rights |
-must pay premium -may designate (and change) beneficiary -may take loan or surrender for cash -may assign ownership rights to others -may select dividend and nonforfeiture options |
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Beneficiary Designations |
-primary beneficiary receives proceeds when insured dies -if primary dies before insured then contingent receives proceeds -may be anybody -most designations are revocable -if irrevocable it may not be changed |
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Common Disaster Clause |
-if insured and primary beneficiary die in the same accident -insured always dies last -proceeds go to contingent beneficiary |
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Modes of Payment |
-monthly, quarterly, annually -the more frequent the mode the higher the premium -Annual mode is the cheapest |
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Grace Period |
-applied if premium not paid on time -insured is still covered -insurer pays claim-premium due -individual life insurance: 30 days -group life: 31 days |
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Automatic Premium Loan Rider |
-free option but must be selected by insured -only exists on cash value (whole life) policies -creates a policy loan, will take out premiums from insured's CV -keeps whole life policies from going into nonforfeiture -prevents policy from lapsing |
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Policies with Level Premiums |
-ordinary whole life -limited-pay whole life -single premium whole life -variable whole life -equity indexed whole life -term policies |
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Policies with Flexible Premiums |
-adjustable whole life -universal whole life -variable/universal whole life -interest sensitive whole life |
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Reinstatement Provision |
-applies when policy lapses at end of grace period -allowable up to 5 years after lapse -must pass physical, pay back all premiums, and repay policy loans -if approved, insured maintains original age when policy was first created -do not need insurable interest |
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Policy Loan Provisions |
-applies only to policies with cash value -the most you can take out is CV-interest -charged interest, max=8% -loans do not need to be paid back -face amount-(loan+interest)=amount paid at death -policy will lapse if CV becomes 0 |
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Nonforfeiture Provisions |
-in case the policy lapses, insurer cannot keep your cash value -insured has 3 options (CER) 1. cash surrender 2.extended term 3.reduced paid-up |
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Cash Surrender (Nonforfeiture) |
-exchange policy for full cash value -no further coverage - amount in excess of premiums is taxable |
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Extended Term (Nonforfeiture) |
-exchange cash value for new term policy -default option -same face value as original policy -more protection but for shorter period of time |
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Reduced Paid-Up (Nonforfeiture) |
-exchange cash value for new whole life policy -CV used as single premium for new policy -new policy has immediate CV -face amount will be smaller than original policy -less protection but for life (100) |
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Dividends |
Mutual Insurance Co.- dividends go to policyholders, never guaranteed but can be projected, participating policies, dividends not taxable Stock Insurance Co.-stockholders get dividends, nonparticipating policy |
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Dividend Options |
1. cash 2. interest- insurer leaves dividend with insurer and accumulates interest 3. paid-up additions- can buy more coverage regardless of health 4. apply to premium (insured pays difference) 5. 1 year term- dividend buys term policy (1 year), higher face amount |
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Incontestability Clause |
-insurer can contest a claim during 1st 2 years -company may contest claims for lying, concealment, etc. -after 2 years company must pay all claims -if application incomplete- insurer waives rights to contest on what is blank |
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Assignments |
-owner can permanently or temporarily assign owner's rights -absolute= permanent ownership change -collateral= temporary -does not change beneficiary, just the RIGHT to change beneficiary |
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Suicide Exclusion |
-period of time when policy is bought where suicide is not covered -protects against adverse selection -if insured commits suicide, premiums ONLY are paid back -suicide covered after this period |
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Misstatement of Age Clause |
-applies indefinitely -if insured lied about age (usually younger) the face amount is adjusted to what the insured should have had -premiums not adjusted |
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Settlement (Payout) Options |
1. cash 2. interest 3. fixed amount option (receives fixed $ amount over amount of time) 4. fixed period (receive payments for fixed time, amount varies) 5. annuity |
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Accelerated Death Benefit |
-applies when insured gets terminally ill -insurer pays out portion of death benefit to help pay for medical expenses -face amount is reduced by amount taken out -amount paid out not taxable |
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Exclusions |
-student pilots (or could just be charged extra) -war or military -generally have few exclusions -higher risk applicants pay higher premiums |
