chapter 18

Question 1

states a policyowner must pay a premium in exchange for the insurer’s promise to pay benefits. A policyowner’s consideration consists of completing the application and paying the initial premium

Answer 1

consideration clause

Question 2

the insurer’s basic promise to pay specified benefits to a designated person in the event of a covered loss.

Answer 2

insuring clause/agreement

Question 3

The partial and temporary transfer of rights to another person or entity. are usually intended for securing a loan with a creditor.

Answer 3

Collateral assignments

Question 4

When the assignee receives full control of the policy and rights to the policy benefits from the current policyowner.

Answer 4

absolute assignmen

Question 5

The right to transfer policy rights to another person or entity

Answer 5

the assignment clause

Question 6

prohibits the insurer from questioning the validity of the contract after a certain period of time has elapsed.

Answer 6

incontestable clause

Question 7

built into most commercial health policies lets policyowners assign benefit payments from the insurer directly to the health care provider, thus relieving the policyowner of first having to pay the medical care provider.

Answer 7

the right of assignment

Question 8

provides for the payment of additional income when the insured is eligible for social insurance benefits but those benefits have not yet begun, have been denied, or have begun in an amount less than the benefit amount of the rider.

Answer 8

social security rider

Question 9

pays the total amount of premiums paid into the policy in addition to the face value, as long as the insured dies within a certain time period specified in the policy. It also returns premiums to the living insured at the end of a specified period of time, as long as the premiums have been paid.

Answer 9

return of premium rider

Question 10

Allows the policy face amount to be adjusted to account for inflation based on the consumer price index.

Answer 10

cost of living rider

Question 11

Permits the policyowner to buy additional permanent life insurance coverage at specific points of time in the future without submitting proof of insurability. It also includes specific events like marriage and births, without requiring the proof of insurability. Usually the benefit is allowed every 3 years, up to the original face amount of the policy.

Answer 11

The Guaranteed Insurability Rider (future increase option)

Question 12

pays an additional sum to the beneficiary if the insured dies due to an accident.

Answer 12

The Accidental Death Benefit Rider (multiple indemnity)

Question 13

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

Answer 13

The Accelerated Benefit Rider

Question 14

ensures that premiums will be waived If the individual paying the premiums on a juvenile life policy becomes disabled or dies.

Answer 14

payor rider/clause

Question 15

permits the policyowner to use the policy’s cash value to buy level, extended term insurance for a specified period

Answer 15

extended term option

Question 16

the policyowner pays no more premiums but the face amount is decreased.

Answer 16

reduced paid up option

Question 17

Nonforfeiture Options

Answer 17

Cash Surrender
Extended Term Option
Reduced Paid-Up Option
Cash Option
Reduced Premiums Option
Accumulate Interest Option
Paid-Up Additions Option
One-Year Term Option

Question 18

Exclusion

Answer 18

Suicide Clause
Aviation
War or Military Service
Commitment of a Felony\illegal occupation
Alcohol\Narcotics
Hazardous Occupation or Hobby

Question 19

allow the insurer to automatically use the policy cash value to pay an overdue premium

Answer 19

Automatic Premium Loans

Question 20

states if there is an unpaid premium at the time a claim becomes payable, the amount of the premium is to be deducted from the sum payable to the insured or beneficiary.is a provision that permits unpaid premiums to be taken from claim payments.

Answer 20

Unpaid Premiums Provision

Question 21

states that the insurer is liable only for that proportionate amount of benefits as the insured’s earnings bear to the total benefits under all such coverage.

Answer 21

Relation of Earnings Provision

Question 22

At least give us 2 months before you take us to court.

Answer 22

Legal Actions Provisions

Question 23

an insurance contract specifies how and to whom claim payments are to be made.

Answer 23

Payment of Claims provision

Question 24

provision that requires claims be paid immediately, or within a stated number of days.

Answer 24

Time of Payment of Claims

Question 25

includes the actual policy and the application

Answer 25

entire contract

Question 26

the policy is incontestable after it has been in force a certain period of time, usually two years.

Answer 26

Time Limit on Certain Defenses

Question 27

describes the policyowner’s obligation to the insurer to provide notification of loss within a reasonable period of time

Answer 27

Notice of Claim

Question 28

company's responsibility to supply a claim form to an insured within 15 days after receiving notice of claim

Answer 28

claims form

Question 29

statement that an insured must give an insurance company to show that a loss actually occurred is a Proof of Loss

Answer 29

proof of loss

Question 30

entitles a company, at its own expense, to make physical examinations of the insured at reasonable intervals during the period of a claim, unless it’s forbidden by state law.

Answer 30

physical exam and autopsy

Question 31

allows the insurer to adjust the benefit payable if the age of the insured was misstated when application for the policy was made.

Answer 31

Misstatement of Age

Question 32

the total amount of coverage to be underwritten by a company for one person is restricted to a specified maximum amount, regardless of the number of policies issued.

Answer 32

Other Insurance with This Insurer

Question 33

benefits payable for expenses incurred will be prorated in cases where the company accepted the risk without being notified of other existing coverage for the same risk.

Answer 33

Insurance with Other Insurer

Question 34

gives the company the right to cancel the policy at any time with 45 day's written notice to the insured.

Answer 34

cancelation

Question 35

avoid the duplication of benefit payments and overinsurance when an individual is covered under more than one group health plan.

Answer 35

coordination of benefits (COB) provision

Question 36

states the kind of benefits provided and the circumstances under which they will be paid.

Answer 36

insuring clause

Question 37

coverage under the health insurance policy in question will not be provided for any health condition of the insured that existed before the policy became effective. Insurers often use this exclusion to exclude conditions not disclosed on the insurance application.

Answer 37

preexisting condition provision

Question 38

If a preexisting condition is severe enough, the insurer may issue an impairment rider, which will restrict coverage for the illness or injury in question for a period of years or the life of the policy.

Answer 38

Impairment riders

Question 39

gives the insurer the option to review the policy and terminate the policy on a date specified in the contract. This date us usually the date the policy comes up for renewal.

Answer 39

Optionally Renewable Policies

Question 40

allows an insurer to terminate the coverage but only in the event of one or more conditions stated in the contract. These conditions typically are related to the insured reaching a certain age or losing gainful employment

Answer 40

Conditionally Renewable Policies

Question 41

the policy must be renewed (as long as premiums are paid) until the insured reaches a specified age.

Answer 41

Guaranteed Renewable Policies