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General Insurance > Life Insurance Policy Provisions > Flashcards

Life Insurance Policy Provisions Flashcards

1
Q

The terms of a life insurance policy are spelled out in its ________

A

Provisions, or clauses

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2
Q

Policy provisions describe how…

A

..certain common situations will be handled, as well as the rights and the obligations of the policyowner and the insurer

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3
Q

This provision gives the policyowner a period of time to return a policy for any reason within 10 days of delivery and receive all premiums paid

A

Free look

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4
Q

Sets forth the insurer’s promise to pay benefits upon the insured’s death. Includes what the company will pay, the death benefit amount, and to whole it will be paid

A

The insuring clause or insuring agreement

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5
Q

The owner of a life insurance policy may exercise all policy rights and privileges without the consent of any beneficiary including the right to:

A

-name or change the beneficiary
-select settlement options
-borrow or withdraw policy cash values
-receive policy dividends (participating policies)
-surrender or cancel the policy
-assign or transfer ownership
-select/change the premium payment mode
-select a non-forfeiture option

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6
Q

________ of life insurance is a transfer of the owner’s rights, in whole or part, to another individual or entity

A

Assignment

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7
Q

Types of life insurance policy assignment

A

-collateral assignment
-absolute or permanent assignment

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8
Q

Collateral assignment

A

-temporary or conditional
-does not change ownership
-most common is to pledge all or part of the death benefit as collateral for a loan

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9
Q

Absolute or permanent assignment

A

-transfers all rights of ownership to another person or entity
-a parent may transfer policyownership to a daughter when she reaches 18

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10
Q

The life insurance policy and a copy of the original application constitute the _____ ______

A

Entire contract

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11
Q

The entire contract policy provision states:

A

“No statement shall void this policy or be used in defense of a claim under it unless contained in the application”

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12
Q

The insurer may not refer to documents other than these. When denying or paying a claim

A

Entire contract

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13
Q

__________ or any change made to the contract must be made in writing and agreed to by both the insurer and the policyowner

A

Endorsements

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14
Q

This amendment must be signed by an executive officer of the company and cannot be authorized by an agent/producer

A

Endorsements

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15
Q

A legal term meaning something of value

A

Consideration

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16
Q

Necessary to form a valid contract

A

An exchange of value

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17
Q

The insured’s consideration is:

A

The premium paid and the representations made in the application

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18
Q

The insurer’s consideration is:

A

The promise to pay the face amount of the contract to the named beneficiary upon the death of the insured

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19
Q

This provision states that premiums are due in advance- that is, on or before the date on which the next period of coverage begins

A

Payment of premium provision

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20
Q

The mode of the premium payments is

A

Frequency of payment

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21
Q

Premium payment amounts can either be _____, _____ ______, ______, and _______

A

Level, single payment, graded, or flexible

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22
Q

Life insurance policy’s grace period lasts for a period of up to

A

31 days

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23
Q

If the insured does not pay the premium on date when due, the policy will stay in force for a limited time before the coverage actually lapses, this is the policy’s _____ ______

A

Grace period

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24
Q

The restoration of a lapsed policy as originally purchased

A

Reinstatement

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25
Q

Permanent life policies permit ________ in nearly all cases

A

Reinstatement

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26
Q

The insured will receive reinstatement and the protection of the original policy, if not surrendered for cash, if they do the following:

A

-submits an application for reinstatement within 3 years of lapse
-pay all past due premiums, with interest
-provides satisfactory evidence of insurability (medical exam)

27
Q

A reinstated policy usually starts a new ________ period (2 years), but it does not require a new _____ period

A

Contestability; suicide

28
Q

States that after a life insurance policy has been in effect for 2 years the company cannot claim that a statement made in the application for insurance was meant to defraud the insurer

A

Incontestability provision

29
Q

The suicide clause states that if an insured, whether sane or insane commits suicide during:

A

The first two years after a life insurance contract has been issued, teh company will only pay the premium paid by the insured, not the face amount of the policy

30
Q

Misstatement of age (sex)

A

If a deceased insured misrepresented their age, the face amount of the policy will be adjusted to an amount the premium would have purchased at the insured’s correct age, at the time of purchase

31
Q

The payment of claims provision says the insurer will pay the death benefit ______

A

Promptly

32
Q

The insurance company is generally required to pay a death claim within ____ days after receiving notification of the claim, if after 60 days interest must be paid

A

60

33
Q

Life insurance policy provisions

A

-free look
-insuring clause
-ownership rights
-assignment
-entire contract
-modifications
-consideration
-payment of premium
-grace period
-incontestability
-suicide
-misstatement of age or sex
-payment of claims

34
Q

The person or entity who will get the death benefit

A

Beneficiary

35
Q

A beneficiary is defined as a “ ______ or _____” to whom payment of life insurance policy proceeds will be made upon the death of the insured

A

Person; interest

36
Q

Life insurance beneficiaries can be designated by ______ that need not be identified by name, “my children” “my spouse”

A

Classes

37
Q

A ________ is a legal entity which can hold title to property while its managed for the benefit of others

A

Trust

38
Q

There are three parties to a trust:

A
  1. The grantor
  2. The trustee
  3. Beneficiary
39
Q

The _____ is the individual who sets up the trust, transfers property into it, and writes the instructions as to how the trust will operate

A

Grantor

40
Q

The _______ is the party that manages the property according to the grantor’s instructions. May be an individual or another legal entity such as a bank

A

Trustee

41
Q

The __________ is the person who receives the benefits of the trust

A

Beneficiary

42
Q

Who can be a beneficiary?

A

-individuals
-classes
-trusts
-minors
-estates
-charities
-university/colleges

43
Q

Per capita distributions

A

Means “by the head” and divides the policy’s death benefit equally among the surviving members of the class

44
Q

The ____ ______ beneficiary designation does not transfer death proceeds below a generational level

A

Per capita

45
Q

Per stirpes distribution

A

Means “by the branch” and signifies that the children of a deceased class beneficiary are entitled to that beneficiary’s share of the proceeds

46
Q

The _______ beneficiary is the first in line to receive the policy’s death benefit

A

Primary

47
Q

The ________ beneficiary is the next in line to receive the policy’s death benefit

A

Contingent/secondary

48
Q

Third in line if the secondary beneficiary dies

A

Tertiary beneficiary

49
Q

A secondary/contingent beneficiary has no right to benefits if

A

Any primary beneficiary is still alive

50
Q

Revocable beneficiary

A

The policyowner may submit to the insurer a written request to change or revoke beneficiary designations without notice and without the beneficiaries knowledge or consent

51
Q

Policyowner’s give up their right to change a beneficiary designation

A

Irrevocable beneficiaries

52
Q

Beneficiary designation changes generally take effect on

A

The date of written request

53
Q

Allows the insurer to pay all or part of the policy’s death benefit to someone other than the designated beneficiary if the beneficiary is a minor, is deceased, or cannot be found, or someone other than the beneficiary incurred the insured’s final medical or funeral expenses

A

Facility of payment provision

54
Q

Directs that if the insured and primary beneficiary die in the same accident and its impossible to tell who died first, the primary is assumed to have died first

A

Uniform simultaneous death act

55
Q

Uniform simultaneous death act

A

-insured and primary beneficiary are in the same accident
-both die in accident
-assumes primary beneficiary dies first
-proceeds paid to contingent beneficiary

56
Q

Common disaster provision

A

-insured and primary beneficiary are in a common accident
-both die within 30-90 days after accident
-proceeds paid as if the primary beneficiary dies first
-proceeds paid to contingent beneficiary

57
Q

May be included in a life insurance policy requiring that the policy proceeds be paid to the beneficiary in installments of a defined amount and at a set intervals

A

Spendthrift provision

58
Q

Spendthrift provision

A

-death benefit cannot be paid in a lump sum
-death benefits cannot be claimed by creditors before payment to beneficiary
-death benefits cannot be pledged by the beneficiary to a creditor
-death benefits cannot be used by.the beneficiary as collateral for a loan

59
Q

Exceptions that define when coverage does not apply

A

Exclusions

60
Q

Under this exclusion, death by suicide is not covered for a certain period of time after the policy goes into effect. May be 1 or 2 years

A

Suicide exclusion

61
Q

Status-type war or military service exclusion

A

Eliminates coverage for the entire period during which the insured is in the military, regardless of how the insured dies. Even if on leave, no death benefit would be paid

62
Q

Results type war or military service exclusion

A

Coverage is eliminated only if the cause of death was related to military service

63
Q

May be included if the insured engages in activities such as mountain climbing, auto racing, sky diving, or scuba diving, either for pay or recreation

A

The hazardous occupation or hobby exclusion

64
Q
A

General Insurance (20 decks)

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