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IL Life and Health Insurance > Life Insurance Clauses and Provisions > Flashcards

Life Insurance Clauses and Provisions Flashcards

1
Q

Insuring Clause

A

Insurer’s basic promise to provide benefits if conditions are met

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2
Q

Entire Contract is only between…

A

Insurer and Policyholder

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3
Q

Entire contract consists only of…

A

Policy, any riders, and the application

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4
Q

Entire contract clarifies that statements on the application are…

A

Representations

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5
Q

Entire contract explains who can make changes to the contract:

A

Policyholder and top-level employee of insurer

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6
Q

Who cannot make changes to the entire contract?

A

Producers

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7
Q

Consideration Clause

A

Clarifies what’s being exchange in the contract

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8
Q

In the consideration clause, the consumer provides…

A

Premium and application

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9
Q

In the consideration clause, the insurer provides…

A

Promise to pay benefits

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10
Q

Incontestable Clause

A

Insurer has 2 years to investigate potentially false statements on an application and rescind the policy

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11
Q

Misstatement of Age or Gender

A

Let’s insurer adjust the death benefit based on incorrectly stated age or gender

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12
Q

The misstatement of age or gender clause is separate from the incontestable clause by…

A

Having no rescission and not 2 year limit

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13
Q

Suicide Clause

A

No death benefits for suicide within 2 years; insurer will refund premium to the beneficiary

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14
Q

Free Look Period

A

Give buyer a limited time to cancel and receive a total refund

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15
Q

Free look periods are treated as a…

A

Rescission

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16
Q

Free look periods are applicable to…

A

Individual purchases, not necessarily group life

17
Q

Free look periods are at least…

A

10 days, but depends on state law

18
Q

Free look period begins when…

A

Policy is received, not necessarily when issued

19
Q

Grace Period

A

Typically allows insurance to stay in force for 1 month after a premium’s due date

20
Q

If death occurs during grace period…

A

Insurer pays death benefits minus unpaid premium

21
Q

Reinstatement Clause

A

Allows policyholder to regain insurance within 3 years after cancellation

22
Q

Reinstatement requires payment of…

A

All premium that would’ve been due if not cancellation

23
Q

Reinstatement premium is based on issue age as if…

A

No lapse or surrender occurred

24
Q

To reinstate, must medically qualify and…

A

Pay off any policy loans

25
Q

Reinstatement is only possible if…

A

Cancelled policy didn’t result in return of cash surrender value

26
Q

LI Exclusions

A

Aviation, war, dangerous hobbies, travel to dangerous countries

27
Q

Other than war, life insurance exclusions might be handled by…

A

Charging higher premium instead

28
Q

Travel bans might be restricted by…

A

State law

29
Q

Death from exclusions might result in…

A

Refund of premium to beneficiary

30
Q

Dividend

A

Return of premium

31
Q

With dividends, policyholder can choose to…

A

Reduce payment; reduce future premiums; increas the death benefit via pay up additions; increase cash value

32
Q

Are dividends guaranteed?

A

Never

33
Q

Settlement Options

A

How death benefit will be paid to beneficiary

34
Q

Settlement options can be chosen by…

A

Owner, in advance; Beneficiary, upon insured’s death; Insurer, vie default option

35
Q

Settlement options typically are…

A

Lump sum (default); kept with insurer until later date; kept with insurer but with periodic payments of dividends/interest; regular installment payments; convert into an annuity with regular payments for life

IL Life and Health Insurance (29 decks)

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