Life - Life Insurance Policy Provisions, Options & Riders (1.4)

Front 1

Insuring Clause

Back 1

ER's basic promise to pay benefits in accordance with the policy issued

Front 2

Execution Clause

Back 2

states when the insurance contract will go in effect

Front 3

Free-Look Provision

Back 3

begins when the policy is delivered to the policyowner, and allows the policyowner the right to refuse and return the policy for a full premium refund

Front 4

Consideration Clause

Back 4

stipulates the basis on which the company issues the contract

Front 5

-change the beneficiary
-receive dividends
-take out policy loans
-partially/completely sign the rights of the contract to another party

Back 5

Owners right include:

Front 6

Grace Period Provision

Back 6

time that a policy stays in force after the premium due date (even though no premium has been paid)

Front 7

Incontestable Clause

Back 7

states the policy must be incontestable after it has been in force during the lifetime of the ED for a period of 2 years from its date issued

Front 8

Automatic Premium Loan Provision

Back 8

If the premium becomes past due by a certain number of days, the ER is authorized to withdraw from the policys cash value the amount of premium due

Front 9

Privelege of Change Clause

Back 9

allows the ED to change to another type of insurance without proving insurability

Front 10

Collateral Assignment

Back 10

the transfer of benefits or payments under a life policy to a creditor as part of the security for a loan

Front 11

Absolute Assignment

Back 11

if all control and rights are fiven to the third party

Front 12

Voluntary Assignment

Back 12

when the policyowner intentionally chooses to assign all ownership rights in the poicy over to another person
Example- when a parent gives their child a poicy after the child reaches adulthood

Front 13

Interest Only Option

Back 13

insurance company retains the death proceeds and invests them for the benficiary. The ER then pays a stated amount of interest to be paid to the beneficiary at regular intervals for a specified period of time

Front 14

Fixed Amount Option

Back 14

a certain amount is chosen to be paid to the beneficiary in regularly scheduled intervals

Front 15

Fixed Period Option

Back 15

company pays the beneficiary equal payments at regular intervals over a specified period of time

Front 16

Joint and Survivor Life Income Option

Back 16

pays a lifetime income to the beneficiary, then a reduced benefit to a second payee upon the death of the first payee

Front 17

Straight Life Income Option

Back 17

beneficiary recieves a guaranteed income for life, regardless of how long he/she lives

Front 18

Refund Annuity Option

Back 18

guarantees that an income will be paid for the lifetime of the beneficiary and to the contingent beneficiary if the primary beneficiary dies before receiving an equal amount

Front 19

Life Income Certain

Back 19

beneficiary will recieve payments for life

Front 20

Viatical Settlements

Back 20

a terminally ill insured assigns his/her insurance policy to a viatical settlement company in exchange for a lump sum payment equal to a percentage of the policys face value

Front 21

Accelerated Benefits

Back 21

allows ED who are terminally ill to access a percentage of policy death benefitsbefore dying

Front 22

Section 1035 : Policy Exchange

Back 22

deals with the ltransfer of lifeinsurance and annuity policies from one company to another on a tax-free basis

Front 23

1. Filing Method
2. Endorsement Method

Back 23

Two methods of naming a beneficiary:

Front 24

Filing Method

Back 24

(AKA: recording method) -- any beneficiary change must be requested in writing to the ER, the ER then records the change

Front 25

Endorsement Method

Back 25

requires that the change of beneficiary be typed or attached to the policy

Front 26

1. Family
2. Creditor/Debtor
3. Business
4. Trusts
5. Estate
6. Charities
7. Minors

Back 26

Allowable Beneficiaries (insurable Interest) include:

Front 27

Irrevocable Trusts

Back 27

cant be changed or canceled once it is put in place without the consent of the beneficiary

Front 28

Revocable Trusts

Back 28

may be changed or terminated during the grantors lifetime

Front 29

1. Primary
2. Contingent
3. Tertiary

Back 29

Succession of Beneficiaries

Front 30

Uniform Simultaneous Death Act

Back 30

should the ED and the primary beneficiary dies at the same time, this act protects the contingent beneficiary

Front 31

Common Disaster Provision

Back 31

addresses the issue of the primary beneficiary outliving the ED, even if only for a few days

Front 32

Spendthrift Clause

Back 32

prevents a beneficiary from assigning or creating a lien against the proceeds

Front 33

1. War/Military Service
2. Avaition
3. Hazardous Occupation
4. Commision of a Felony

Back 33

Risk Exclusions for life insurance policies include:

Front 34

Guaranteed Insurability Rider

Back 34

Ed can purchase additional insurance regardless of their health at specified ages, date, events

Front 35

Waiver of Premium (WP)

Back 35

it protects the policy from lapsing for nonpaymentof premiums if the owner becomes totally and permanently disabled

Front 36

1. the disability must be permanent
2. waiting period is 3-6 months
3. waiver typically stops at age 60 or 65

Back 36

3 stipulations with Waiver of Premiums:

Front 37

Cost of Living Adjustment (COLA)

Back 37

guard against inflation and to prevent insurance coverage form falling behind the increasing cost of living