Chapter 12 Flashcards
who are the largest life insurers in the US?
- Northwestern Mutual
- New York Life
- Metlife
for life insurers, is bigger better for an Insured?
no, big insurance companies many be more automated
what is when the policyholder possesses all contractual rights in the policy while the insured is living?
ownership clause
what is the entire contract clause?
the policy and application constitutes the entire contract
what is when insurer can not contest the policy after it has been in force for two years?
the incontestable clause
what is the suicide clause?
if insured commits suicided, within two years the face amount of the policy is not paid. premiums refunded
what is grace period?
period to pay overdue premiums
what are terms if policy lapses for non payment?
reinstatement clause
what is when payment at death adjusted to amount of coverage premiums paid would have purchased?
misstatement of age or sex clause
what is beneficiary designation?
- primary/ contingent
- revocable/ irrevocable
- specific persons/ class
what is change of plan?
provides policyholders flexibility to change plans
what are exclusions and limitations?
- war
- aviation (private pilot)
- high risk hobbies ( auto racing, sky diving)
what is payment of premiums?
payment terms
what are the two types of assignment clause?
absolute and collateral
what is policy loan provision?
borrow from cash value
what are overdue premiums borrowed from cash value?
automatic premium loans
what applies to whole life/ cash value if polices are “surrendered”?
nonforfeiture options (cash value)
what has higher premiums than just life insurance protection?
whole life policies
who must pay at least a minimum to policyholders who “surrender” policies?
insurers
what are statutory options for the nonforfeiture options?
- cash value
- reduced paid up insurance
- extended term insurance
what does cash value mean?
take cash
what is reduced paid up insurance?
cash surrender value is used to buy a paid up policy with reduced limit
what is extended term insurance?
cash surrender value used to buy period of term insurance with the same limit
what are the settlement options on policy proceeds?
- cash
- interest option
- fixed period option
- fixed amount option
- life income (annuity) option
what is interest option?
interest paid to beneficiary periodically
what is fixed period option?
payment over a fixed period of time at guaranteed interest rate
what is fixed amount option?
scheduled payment of a fixed amount with an agreed interest rate until funds are exhausted
what is life income (annuity) option?
guarantees income for life
what are some additional policy terms?
- waiver of premium provision
- term insurance rider / buy additional term limits
