10.2a

Question 1

In addition to the standard policy clauses and provisions, policy beneficiary clauses protect the interest of the ______ in situations where extenuating circumstances exist.

Answer 1

policyowner and the designated beneficiary

Question 2

To help determine how policy proceeds are distributed in the event that a clear solution is not present, additional policy clauses are often added to a life insurance policy to ______.

Answer 2

further define who receives the policy’s proceeds upon the death of the insured

Question 3

The Uniform Simultaneous Death Act, established under the U.S. Uniform Probate Code and adopted by most states, defines the outcome of a life policy’s proceed distribution in the event that both the policy’s insured and primary beneficiary die in the same accident and no proof exists of who lived longer. As defined by the Act, in the event that it is unclear who out lived the other, the courts will decide that the insured has outlived the primary beneficiary, and if a ______ is named, he or she will receive the death benefit proceeds. If no contingent beneficiary is named in the policy, the death benefit proceeds will be paid to the policyowner’s estate.

Answer 3

contingent beneficiary

Question 4

To further define who receives death benefits in the event of the simultaneous or nearly simultaneous death of both the insured and primary beneficiary, a policyowner can include a ______ to the life policy specifically stating that the primary beneficiary must outlive the insured for a defined period of time in order to receive the policy’s death benefits. This period is commonly 10 to 30 days after the death of the insured. Most commonly, this clause defines whether the primary or the contingent (secondary) beneficiary is to receive the death benefit in the event that both the insured and primary beneficiary die as a result of a common disaster.

Answer 4

common disaster clause

Question 5

A life policy’s ‘spendthrift’ clause, if established by the policyowner, protects the proceeds of a life insurance policy from the beneficiary’s spending habits or any redirection of proceeds to any of the beneficiary’s creditors. Under this clause, the beneficiary cannot ______ or assign proceeds directly to a creditor, nor can a beneficiary surrender benefits for a present value lump sum. Essentially, this clause ensures that the intentions of the policyowner are carried out when the policy’s death benefit is distributed to the policy’s beneficiary.

Answer 5

receive a lump sum benefit