Chapter 3 - Policy Provisions

Question 1

Entire contract clause

Answer 1

States that the policy, the application, and the riders all combined complete the contract.
Policy
Application
Rider
Also states that only the insurer can make changes

Question 2

Assignment

Answer 2

The transfer of ownership in a policy. The original policyowner loses the rights

Question 3

Two types of assignment

Answer 3

Absolute and collateral

Question 4

Absolute assignment

Answer 4

100% and permanent.

Question 5

Collateral assignment

Answer 5

A portion of the policy is assigned. Typically as a means of paying the balance. Partial and temporary assignment

Question 6

Ownership clause

Answer 6

Designates the owner of the policy when owner is someone other than the insured.

Question 7

Insuring clause

Answer 7

The purpose of the policy. Identifies parties in contract and amount of death benefit. It’s what the insurer cares about

Question 8

Consideration clause

Answer 8

Establishes amount of premium per payment for insurer’s promise to pay

Question 9

Incontestability clause

Answer 9

After two years, insurer cannot contest or void policy

Question 10

Suicide clause

Answer 10

If insured commits suicide within two years, insurer refunds premiums only

Question 11

Misstatement of age or gender

Answer 11

Allows for insurer to adjust the death benefit according to correct age or gender of insured

Question 12

Free look period

Answer 12

10 days from date of delivery to owner