Chapter 9 Flashcards
Beneficiary
The person or entity designated to receive the death proceeds of a life insurance policy
Standard Policy Provisions Laws
State laws that require life and health insurance policies to include certain provisions but allow insurers to select the actual wording as long as it is at least as favorable to the policy owner as the statutory language.
Grace Period
An additional period of time, usually 30 or 31 days, granted in some types of insurance for the policyholder to pay the premium after it has become due. During the grace period, the coverage remains in force.
Policy Loan
An advance of money available to a life insurance policy owner from the policy’s cash value
Automatic Premium Loan Option
Life insurance policy provision by which a delinquent premium is automatically paid by a policy loan
Incontestable Clause
A provision in life and health insurance that specifies that, except for nonpayment of the premium, the insurer will not contest the policy after it has been in force for a specified period (usually 2 years) during the insured’s lifetime.
Divisible Surplus
That portion of an insurer’s surplus that is declared as a dividend to be distributed to policyowners and/or stockholders of the insurer
Dividend Options
A set of provisions in a participating life insurance policy that describe how the policy owner can use the dividends, usually to reduce the premium payment, to buy additional paid-up permanent insurance, to accumulate at interest, to buy term insurance, or to make the policy a paid-up policy at an earlier age that originally planned.
Fifth Dividend Option
A provision in cash value life insurance wherby dividends can be used to purchase term insurance
Entire Contract Provision
In life and health insurance, a provision that specifies that the policy and the attached application constitute the entire agreement between the parties.
Reinstatement Provision
In life insurance, a clause giving the owner of a lapsed policy the right to reacquire the coverage under certain conditions
Representation
A statement in an insurance application that is substantially true to the best of the applicant’s knowledge and belief.
Misstatement of Age or Gender Clause
A life insurance policy provision that specifies that if the insured’s age or gender has been misstated, the benefits payable under the policy will be adjusted to what the premium paid would have purchased at the correct age or gender.
Nonforfeiture Options
A set of choices available regarding how a life insurance policy owner can use the policy’s cash value. These choices include the options to surrender for cash, buy a reduced amount of paid-up whole life insurance, or buy extended term insurance. For long-term care insurance, an optional benefit provides extended benefits or a cash refund if a policy lapses after it has been in force for a specificied number of years.
Settlement Options
Ways in which a life insurance policy’s death proceeds can be taken, typically in cash, under an interest option, under a fixed-period or fixed-amount option, or under a life-income option.
Backdating
Issuance of a life insurance policy as if it had been purchased when the insured was younger in order to obtain a lower periodic premium
Primary Beneficiary
The person of organization that is to receive the proceeds of a life insurance policy if he, she , or it survives the insured
Contingent Beneficiary
The person or entity designated to receive the death proceeds of a life insurance policy if the primary beneficiary predeceases the insured
Suicide Provision
An optional life insurance policy provision that specifies that if the insured, whether sane or insane, commits suicide during the first 1 or 2 years of the policy, the insurer will be liable only for a return or premium
Ownership Provision
In life insurance, a clause that specifies that the insured is the owner of the policy (unless the application states otherwise) and that the owner can change the beneficiary (unless named irrevocably), assign the policy, and exercise other ownership rights
Assignment Provision
A clause that specifies the conditions under which a policyowner can transfer some or all of his or her ownership rights in the policy to another
Plan Change Provision
An insurance policy provision that states the parties may agree to change the terms of the contraact
Accelerated Benefits Provision
A provision in a life insurance policy that allows death benefits to be paid to the policyowner prior to the insured’s death under certain circumstances such as if the insured is terminally ill
Accidental Death
A death that is caused by an unintentional event that is sudden and unexpected
