6 - Life Policy Provisions, Non-Forfeiture Options, and Dividends Flashcards
In a life insurance policy, the __________ indicates that in return for the premiums paid, the insurer will pay to the designated beneficiary a sum of money as indicated on the Declarations Page of the contract when proper proof of death of the insured is received.
-insuring agreement
The entire contract clause states that the contract is NOT complete unless a photo copy of the ___________ is attached to the printed policy. If the application is not with the policy, the contract is not complete.
-policy application
North Carolina insurance statutes require the life insurance policy to contain an incontestable clause. This clause states that life insurance policies are contestable by the insurer for ________ from the __________.
- two years
- issue date
T/F: Misstatement of age or gender allows the insurance company to contest the policy regardless of when it is discovered.
True
Misstatement of Age (or gender) Clause allows adjustments to be made as follows:
a. understated ages will be adjusted to cover ___________.
b. overstated ages will not adjust death benefit but _____________ will be refunded.
- higher death benefits
- overpaid premiums
North Carolina statutes require a grace period of _________ from the premium due date for Life Insurance Policies.
-31 days
If the insured dies during the grace period, the ________ will be paid minus any premium owed.
-full death benefit
A reinstatement clause allows the policyowner to restore a lapsed (cancelled) life insurance policy to its original condition when purchased. North Carolina insurance regulations require insurers to allow application for reinstatement up to ________ from the default in payment.
-5 years
Reinstatement provides the following advantages to the policyowner:
a. Reinstatement is often cheaper than purchasing a new policy since a new policy would be based on the insured’s __________.
b. Reinstatement allows all values accumulated in the policy to be ________
- current age
- restored
Reinstated policies are subject to a new _______________.
-2 year contestable period
Insurers reserve the right to do the following when a request for a life insurance policy reinstatement is made:
a. The insured may be required to provide satisfactory __________.
b. The company may refuse to reinstate the policy if the risk has changed to an _______.
c. If there has been a negative change in the insured’s health, the insurance company may rate the policy and __________.
d. The policyowner must ____________.
e. If the policy is a cash value contract (Whole Life), the company may request that any ______ and _____ be paid at the time of reinstatement.
- evidence of insurability
- unacceptable risk
- increase the premiums
- pay back premiums owed
- loans and interest
Assignment is the transference of the policyowner’s rights and benefits in the life insurance policy. Rights and benefits can be transferred in part or in whole. There are two (2) types of assignments:
- Absolute Assignment
- Collateral Assignment
_____________ is a type of assignment that transfers all policy rights to another party such as a parent to a grown child. Insurers require that these assignment requests be made on the insurer’s ______ form
- Absolute Assignment
- Assignment
____________ is a type of assignment that uses the life insurance policy benefits as collateral for a debt. These assignments are only for the amount of the debt owed at the time of death of the insured and last only for the period of indebtedness. Insurers require that these requests be on the insurer’s _____ form.
- Collateral
- designated
The guaranteed right to Conversion is generally related to exchanging a ________ policy for another life insurance policy. Conversion is typically to either whole life or an endowment life policy. Conversion, WITHOUT evidence of insurability, would be for an _______ to the death benefit on the term policy.
- Term Life
- equal amount
An excess interest provision allows interest that is more than the policy’s _____________ to be credited to the cash account.
-guaranteed rate of interest
The two methods used for the Excess Interest Provision are:
- Portfolio Method
- Index-linked Method
_______ is defined as Excess interest earnings are tied to an economic indicator such as the Consumer Price Index.
-Index-linked Method
________ is defined as Excess interest is credited in direct relation to the company’s earnings on investments.
-Portfolio Method
The Free Look provision gives the policy-owner ________ from the date that the policy is ____________ to cancel coverage and receive a full refund of the premium deposit.
- 10 days
- delivered to the policy-owner
The features of the Spouse Term Rider normally include the following:
a. The rider provides ________ insurance for the spouse of the primary in an amount equal to, less than or greater coverage than the coverage provided by the underlying life insurance policy on the primary.
b. The rider usually requires ______ on the spouse to be added.
c. The rider usually has a limiting age such as age sixty-five (65). Once the spouse reaches that age, he or she will _________.
d. The rider usually requires _____ of the rider at the end of the term or when the primary dies (whichever comes first).
- Level Term Life
- evidence of insurability
- terminate from the policy
- conversion
The Child’s Term Insurance Rider provides a mechanism to insure the life of a child for a minimal amount of death benefit, typically for ________, and to do so very economically.
-$5,000 to $10,000
The Suicide Clause states that suicide is contestable if the insured commits suicide within ________ after the policy was issued. If this occurs, the policy will not pay the death benefit.
-2 years
The War (Military Service) Clause can invalidate death claims from those in the armed services depending upon whether there is a _______ or a _______ provision in the policy.
- Status Clause
- Results Clause
The ________ excludes all causes of death while the insured is on active duty in the military.
-Status Clause
