4. Life Insurance Policies : Life, Options & Riders

Question 1

… is a policy assignment under which the assignee receives full control over the policy and full rights to its benefits.

Answer 1

Absolute Assignment

Question 2

… a benefit rider for accidental death coverage that pays additional sum to the beneficiary if the insured dies due to a covered accident. Also called Multiple Indemnity.
… It also provides an additional death benefit for a limited period of time at the lowest possible cost.

Answer 2

Accidental Death Benefit Rider

Question 3

… a benefit rider allows the insured to receive a portion of the death benefit before death if the insured has a terminal illness and is expected to die within 1-2 years.

Answer 3

Accelerated Benefits Rider

Question 4

… an option that allows the policy owner to leave dividends with the insurer to accumulate interest; taxes will need to be paid on any interest made.

Answer 4

Accumulate Interest Option

Question 5

… a rider that allows the insurance company to deduct the overdue premium from an insured’s cash value by the end of the grace period if a payment is missed on a life policy. This is usually taking as a loan for you by the insurance company to cover a missed premium payment.

Answer 5

Automatic Premium Loan Rider

Question 6

… an option that allows the policy owner to cash out the dividends they receive.

Answer 6

Cash Option

Question 7

… an option that allows the policy owner to receive the policy’s cash value. The policy owner no longer has coverage at this point.

Answer 7

Cash Surrender Option

Question 8

.. an assignment of a policy to a creditor as security for a debt. The creditor is entitled to be reimbursed out of policy proceeds for the amount owed.

Answer 8

Collateral Assignment

Question 9

… a clause that states a policy owner must pay premium in exchange for the insurer’s promise to pay benefits.

Answer 9

Consideration Clause

Question 10

… a rider that adds dependents as additional insureds on a policy. These riders are usually reserved for a spouse and children.

Answer 10

Dependent Riders

Question 11

… a rider that can allow additional coverage to a whole life policy.

Answer 11

Decreasing Term Rider

Question 12

… an option a policy owner has when receiving dividend payments from an insurance policy.

Answer 12

Dividend Option

Question 13

… a provision that states the insurance policy itself, any riders and endorsements / amendments, and the application comprises the entire contract between all parties.

Answer 13

Entire Contract Provision

Question 14

… are features of an insurance policy stating that the policy will not cover certain risks.

Answer 14

Exclusions

Question 15

… an option that permits the policy owner to use the policy’s cash value to buy level, extended term insurance for a specified period.

Answer 15

Extended Term Option

Question 16

… a period that states the policy owner is permitted a certain number of days once the policy is delivered to look over the policy and return it for a refund of all premiums paid.

Answer 16

Free Look Period

Question 17

… a period after a premium payment is due, during which the protection of the policy continues even through the payment for the renewal premium has not as yet been received.

Answer 17

Grace Period

Question 18

… a rider that permits the policy owner to buy additional permanent life insurance coverage at predetermined intervals without submitting proof of insurability.

Answer 18

Guaranteed Insurability Rider

Question 19

… a provision that states the insurance company may not challenge the validity of the policy once the policy has been in force for a period of time, typically two years.

Answer 19

Incontestable Provision

Question 20

… a clause that promises to pay a specified benefits to a designated person in the event of a covered loss.

Answer 20

Insuring Clause

Question 21

… a provision that allows the insurer to adjust the policy benefits if the insured’s age or sex is misstated on the policy application.

Answer 21

Misstatement of Age or Sex Provision

Question 22

… an option for your cash value if you terminate a policy that has a cash value.

Answer 22

Nonforfeiture Option

Question 23

… an option that allows the policy owner to exchange the dividend for additional coverage in the form of a one-year term policy.

Answer 23

One-Year Term Option

Question 24

.,, an option that allows the policy owner to exchange the dividend for an additional single payment whole life policy.

Answer 24

Paid-Up Additions Option

Question 25

… a provision that waives future premiums for a juvenile life insurance policy if the person responsible for paying the premiums dies or becomes disabled.

Answer 25

Payor Provision

Question 26

… a provision that applies to policies that have cash value also have the policy loan and withdrawal provisions.

Answer 26

Policy Load Provision

Question 27

… an option for non-forfeiture that allows the policy owner to reduce the policy’s benefit amount and, in turn, cases making premium payments.

Answer 27

Reduced Paid-Up Option

Question 28

… an option on dividends that allows the policy owner to return the dividend payment to the insurer in exchange for a reduction in the following year’s premium payments.

Answer 28

Reduced Premiums Option

Question 29

… a provision that allows a lapsed policy back in force by producing satisfactory evidence of insurability and paying any past-due premiums required.

Answer 29

Reinstatement Provision

Question 30

… a rider that pays the total amount of premiums paid into the policy in addition to the face value, as long the insured dies within a specific period specified in the policy.

Answer 30

Return of Premium Rider

Question 31

… a clause that states the policy will be voided, and no benefit will be paid if the insured commits suicide within two years from policy insurance.

Answer 31

Suicide Clause

Question 32

… a rider that allows the policy owner to waive premium payments during a disability and keeps the policy in force.

Answer 32

Waiver of Premium Rider

Question 33

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Answer 33

Long Term Care Rider