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37 Cards in this Set

  • Front
  • Back
Insuring Clause
ER's basic promise to pay benefits in accordance with the policy issued
Execution Clause
states when the insurance contract will go in effect
Free-Look Provision
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
Consideration Clause
stipulates the basis on which the company issues the contract
-change the beneficiary
-receive dividends
-take out policy loans
-partially/completely sign the rights of the contract to another party
Owners right include:
Grace Period Provision
time that a policy stays in force after the premium due date (even though no premium has been paid)
Incontestable Clause
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
Automatic Premium Loan Provision
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
Privelege of Change Clause
allows the ED to change to another type of insurance without proving insurability
Collateral Assignment
the transfer of benefits or payments under a life policy to a creditor as part of the security for a loan
Absolute Assignment
if all control and rights are fiven to the third party
Voluntary Assignment
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
Interest Only Option
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
Fixed Amount Option
a certain amount is chosen to be paid to the beneficiary in regularly scheduled intervals
Fixed Period Option
company pays the beneficiary equal payments at regular intervals over a specified period of time
Joint and Survivor Life Income Option
pays a lifetime income to the beneficiary, then a reduced benefit to a second payee upon the death of the first payee
Straight Life Income Option
beneficiary recieves a guaranteed income for life, regardless of how long he/she lives
Refund Annuity Option
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
Life Income Certain
beneficiary will recieve payments for life
Viatical Settlements
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
Accelerated Benefits
allows ED who are terminally ill to access a percentage of policy death benefitsbefore dying
Section 1035 : Policy Exchange
deals with the ltransfer of lifeinsurance and annuity policies from one company to another on a tax-free basis
1. Filing Method
2. Endorsement Method
Two methods of naming a beneficiary:
Filing Method
(AKA: recording method) -- any beneficiary change must be requested in writing to the ER, the ER then records the change
Endorsement Method
requires that the change of beneficiary be typed or attached to the policy
1. Family
2. Creditor/Debtor
3. Business
4. Trusts
5. Estate
6. Charities
7. Minors
Allowable Beneficiaries (insurable Interest) include:
Irrevocable Trusts
cant be changed or canceled once it is put in place without the consent of the beneficiary
Revocable Trusts
may be changed or terminated during the grantors lifetime
1. Primary
2. Contingent
3. Tertiary
Succession of Beneficiaries
Uniform Simultaneous Death Act
should the ED and the primary beneficiary dies at the same time, this act protects the contingent beneficiary
Common Disaster Provision
addresses the issue of the primary beneficiary outliving the ED, even if only for a few days
Spendthrift Clause
prevents a beneficiary from assigning or creating a lien against the proceeds
1. War/Military Service
2. Avaition
3. Hazardous Occupation
4. Commision of a Felony
Risk Exclusions for life insurance policies include:
Guaranteed Insurability Rider
Ed can purchase additional insurance regardless of their health at specified ages, date, events
Waiver of Premium (WP)
it protects the policy from lapsing for nonpaymentof premiums if the owner becomes totally and permanently disabled
1. the disability must be permanent
2. waiting period is 3-6 months
3. waiver typically stops at age 60 or 65
3 stipulations with Waiver of Premiums:
Cost of Living Adjustment (COLA)
guard against inflation and to prevent insurance coverage form falling behind the increasing cost of living