Life Insurance Policies - Provisions, Options, and Riders

Question 1

the policyowner’s right to return the policy for a full premium refund within a specified period of time if they decide not to purchase the insurance

Answer 1

free-look provision

Question 2

a life insurance policy is meant to protect the insured in the event of lapsed premium payment

Answer 2

grace period

Question 3

provision that allows a policyowner to reinstate a lapsed policy with some stipulations

Answer 3

reinstatement provision

Question 4

allows a policyowner to borrow money from the cash values of their policies and can be repaid at any time

Answer 4

policy loan provision

Question 5

specifies that after a certain period of time, the insurance company cannot contest a death claim or refuse payment of the proceeds even based on a material misstatement, concealment, or fraud, so long as the contract continues to be in force

Answer 5

incontestable clause

Question 6

states that the ownership transfer is complete and irrevocable

the assignee receives full control over the policy and full rights to its benefits

Answer 6

absolute assignment

Question 7

provision that provides for the early payment of some portion of the policy face amount should the insured suffer from a terminal illness or injury

Answer 7

accelerated benefit provision

Question 8

provision that protects the insurance company and its policyowners against the possibility that a person might buy an insurance policy and commit suicide to provide a sum of money for the beneficiary

Answer 8

suicide provision

Question 9

provision that allows the insurer to adjust the policy benefits if the insured’s age or sex is misstated on the policy application

Answer 9

misstatement of age or sex provision

Question 10

provision that allows the insured to stop paying premiums and not forfeit any of the equity in the policy

Answer 10

nonforfeiture options provision

Question 11

allows the policyowner to receive the policy’s cash value in exchange for policy surrender

Answer 11

cash surrender

Question 12

a return of part of the premiums paid as a result of an insurance company’s end-of-year surplus

Answer 12

policy dividends

Question 13

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

Answer 13

extended term option

Question 14

provide the applicants with optional policy add-ons at an additional cost to meet their unique needs

Answer 14

policy riders

Question 15

allows the policyowner to waive premium payments during a total and permanent disability and keeps the policy in force

Answer 15

waiver of premium rider

Question 16

allows premiums to be waived if the person paying the premiums becomes disabled or dies

Answer 16

payor provision

Question 17

provides periodic increases in the amount of insurance protection without requiring the insured to provide evidence of insurability

Answer 17

cost of living adjustment (COLA) rider

Question 18

provision stating that when the insured has died, the beneficiary must file a claim with the insurance company and submit a certified copy of the death certificate

Answer 18

proof of death provision

Question 19

free-look provision

Answer 19

the policyowner’s right to return the policy for a full premium refund within a specified period of time if they decide not to purchase the insurance

Question 20

grace period

Answer 20

a life insurance policy is meant to protect the insured in the event of lapsed premium payment

Question 21

reinstatement provision

Answer 21

provision that allows a policyowner to reinstate a lapsed policy with some stipulations

Question 22

policy loan provision

Answer 22

allows a policyowner to borrow money from the cash values of their policies and can be repaid at any time

Question 23

incontestable clause

Answer 23

specifies that after a certain period of time, the insurance company cannot contest a death claim or refuse payment of the proceeds even based on a material misstatement, concealment, or fraud, so long as the contract continues to be in force

Question 24

absolute assignment

Answer 24

states that the ownership transfer is complete and irrevocable

the assignee receives full control over the policy and full rights to its benefits

Question 25

accelerated benefit provision

Answer 25

provision that provides for the early payment of some portion of the policy face amount should the insured suffer from a terminal illness or injury

Question 26

suicide provision

Answer 26

provision that protects the insurance company and its policyowners against the possibility that a person might buy an insurance policy and commit suicide to provide a sum of money for the beneficiary

Question 27

misstatement of age or sex provision

Answer 27

provision that allows the insurer to adjust the policy benefits if the insured's age or sex is misstated on the policy application

Question 28

nonforfeiture options provision

Answer 28

provision that allows the insured to stop paying premiums and not forfeit any of the equity in the policy

Question 29

cash surrender

Answer 29

allows the policyowner to receive the policy's cash value in exchange for policy surrender

Question 30

policy dividends

Answer 30

a return of part of the premiums paid as a result of an insurance company’s end-of-year surplus

Question 31

extended term option

Answer 31

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

Question 32

policy riders

Answer 32

provide the applicants with optional policy add-ons at an additional cost to meet their unique needs

Question 33

waiver of premium rider

Answer 33

allows the policyowner to waive premium payments during a total and permanent disability and keeps the policy in force

Question 34

payor provision

Answer 34

allows premiums to be waived if the person paying the premiums becomes disabled or dies

Question 35

cost of living adjustment (COLA) rider

Answer 35

provides increases in the amount of insurance protection without requiring the insured to provide evidence of insurability

Question 36

proof of death provision

Answer 36

provision stating that when the insured has died, the beneficiary must file a claim with the insurance company and submit a certified copy of the death certificate