Chapter 7 AD&D

Question 1

AD&D

Answer 1

Accidental Death and Dismemberment - also called the accidental loss of life and limb rider. It’s a policy a producer can sell that pays a lump sum only when death or dismemberment is the direct result of an ACCIDENT. It is a valued policy not a indemnity. Doesn’t cover sickness, such as heart attack or strokes.

The payment in a lump sum is called the PRINCIPLE SUM for death. You have to loose both limbs or vision in both eyes in order to get the principle sum. If not you get the CAPITAL SUM.

The beneficiary under the death part is whoever is the beneficiary, if dismemberment the policy holder gets paid.

Question 2

Multiple Indemnity Rider

Answer 2

Added to an existing life policy. Provides for a life policy to pay a specified multiple of the face value if the insured dies from an accident. Typically the insured will require a younger age to have a multiple added.

Double indemnity pays double, triple pays triple.

The accident CAN NOT be attributed to a sickness and the death must occur within 90 days.

Question 3

Types of Beneficiaries

Answer 3

Primary Beneficiary: first one in line. recognizes that if the beneficiary dies prior to the insured, you want to add additional beneficiary. If no beneficiary is there, goes to the insureds estate.

Contingent Secondary Beneficiary: 2nd in line.

Contingent Tertiary Beneficiary: third in line.

Minors do not receive benefits directly to them. Insurance companies recommend that the policy owner setup a trust.

It’s suggested to class your beneficiaries, such as “children” in case that changes, you have more children.

Question 4

Uniform Simultaneous Death vs Common Disaster Clause

Answer 4

If the insured and Primary Beneficiary die at the same time, the uniform simultaneous death act states that the beneficiary died first, unless there is proof, and the benefit would go to the Contingent Beneficiary.

Common Disaster Clause: insured could insert this into the policy to ensure that the contingent gets the benefit unless the beneficiary outlive the insured by 60 days.

Question 5

Spendthrift Trust

Answer 5

Controls how much money can be spent of a death benefit. A trust oversees the disbursement on funds.

Question 6

Revocable Beneficiary vs Irrevocable

Answer 6

Revocable: Beneficiary can change by the owner at any time. No vested interest in the policy.

Irrevocable: policy owner names the irritable beneficiary, which requires a vested interest. This beneficiary has control on what the owner can do with the money. The owner can make changes to the policy that doesn’t impact the beneficiary. Such as paying the premium mode,