4) Clauses and Additions of Life Insurance Contract Flashcards
What are Clauses?
Standard provisions, or conditions, which make up each policy.
What are additions
Allow personalizing the policy without changing the basic elements of the policy, this is done with an increase in premiums.
HERES A BUNCH OF DIFFERENT CLAUSES
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Grace period
- This is the time limit that the insurance company grants to pay premiums
- there is no grace period for the first premium payment
- usually 30 days
what is a lapsed contract
a contract that is no longer in effect
What are the four conditions that a contract may be reinstated
1- Make a request
2- Provide Evidence of insurability
3- Pay overdue Premiums (with interest)
4- Repay premium loans
What is Incontestability Clause
An insurer cannot contest a policy after it has been in force for two years unless there is a case of fraudulent misrepresentation.
What is Suicide Clause
If the suicide occurs less than two years after the policy, the face amount will not be paid but the premiums paid so far will be repaid to the beneficiary.
(The two-year period applies to an increase in the face amount as well) [read example in book if confused]
What is an insurable interest
An insurable interest must exist (a link between the policy owner and the life insured, such as a parent, child or even business partner) for the validity of a life insurance contract.
Payment of death benefits: Minors
benefits payable to minors are paid to their parents, who are the legal guardians of their children
Payment of death benefits: Mother and father are both deceased
Parents may designate a guardian for their minor children by will, by declaration sent to the public Curator, or by mandate; given in anticipation of death. The benefit is paid to the designated person.
Payment of death benefits: Parents deprived of parental Authority
In this case, the benefit is paid to the child’s tutor/guardian, or if no tutor has been named, to the director of youth protection.
Payment of death benefits: Persons of full age incapable of caring for themselves
Benefits are payable to those persons if a person is incapable of administering his or her property, the benefit is paid to the mandatory in case of incapacity (the tutor of the insured person’s property)
What is Assignment Clause cession
ASSingment means the owner of the policy transfers ownership to another person with an interest in the insured’s life or health.
What is a basic benefit
The risk that the insurer agrees to bear
What are additional benefits
The additional benefits are added benefits to the basic benefit. The next six cards are the different types
What is Premium waiver in case of disability of the policyholder
This is supposed that the policyholder in not the life insured such as the case of a parent with their child or the case where one of the spouses is the policyholder and the other is the insured spouse.
What is Premium waiver in case of death of the policyholder
The policy will still be in effect at the policy holders death even if the ppremiums are no longer availible
What is Premium waiver in case of disability of the insured
when the policy holder is also the life insured and becomes totally disabled, the premiums are no longer owed while he is disabled
What is Accidental death and dismemberment
An accident is due to an external or violent cause, while the dismemberment means the loss of or use of a body member or a sense (sight)
in case of accidental death or dismemberment this benefit allows for the recipient of an additional face amount in addition to the basic benefits.
What is disability benifit
The disability benefit pays a monthly benefit to the disabled insured.
What is Guaranteed insurability benefits
this benefit allows you to increase coverage without any evidence of insurability, at dates fixed in advance, at the insured’s attained age. The policy holder is not required t increase coverage.
What are endorsements (riders)
see book
What is health endorsement
Provides for a single lump-sum payment of the specified benefits in the event of a critical illness diagnosis and if the insured lives for at least 30 days following the onset of the critical illness.
