LIFE INSURANCE POLICY PROVISIONS Flashcards
What does per capita beneficiary depiction mean?
it means per person / poer head
If no beneficiary is listed, policy benefits will be paid to the insured’s ___
estate
Which payment mode would be the least expensive over the course of a year?
the annual payment mode
What happens to a policy if the premium is not paid during the grace period?
it will lapse for nonpayment of premium
___ is the transfer of policy rights to another party
assignment
beginning on the policy delivery date, the free look provision must be provided for no less than ___ days.
10
A ___ is a trust listed in a person’s will.
testamentary
which provision allows aninsurer to charge a service fee for the collection of premium?
payment of premium provision
what is the name for an insurer’s consideration to the applicant?
the warranty
first-in-line beneficiaries are also known as ___, second-in-line as ___, and third-in-line as ___.
primary, contingent, tertiary
who selects how often a policy premium is paid?
the policyowner
an insurer must respond to an applicant for reinstatement with ___ day of receiving the paperwork.
45 days
T or F: a term to term policy conversion with the same company does not require evidence of insurability
true
benefit proceeds left to an insured’s estate will be decided by a ___ court
probate court
Does a beneficiary have an owner’s rights?
no
which type of policy type allows for cash value loans - term or whole life?
whole life
policy loan interest is due each year on the ___ anniversary date
policy anniversary date
would it be better to reinstate an existing policy or attempt to purchase a new policy?
reinstate the original policy since premium is based on insured’s age at issuance and may result in lower premiums
which beneficiary depiction may not be changed without permission from the beneficiary?
an irrevocable beneficiary depiction
to whole is the interest earned on assets retained by an insurer taxed?
to the beneficiary
suicide is covered once the policy has been issued for ___ years
2 years
a ___ is usually established when benefits are payable to a minor
trust
a women listed as a man on an application will probably receive a ___ benefit at death
higher
what is the most common life insurance policy exclusion
war
what two items constitute an applicant’s consideration
application information and initial premium
death by suicide is not covered during the first ___ years of policy issue.
2 years
do beneficiaries have contractual rights to a contract?
no
how long is a grace period?
no less than 31 days
which beneficiary designation means per family line or lineage?
the per stirpes beneficiary designation
taking a cash value policy loan ___ create a taxable event
does not
only an ___ of an ___ is provided the authority to make or waive a policy provision
approved officer of an insurer
when must the optional APL provision be selected?
at the time of the application
T or F: beneficiary listings may be changed by the insurer using a change of beneficiary forms.
False, the policyowner, not the insurer, may change the beneficiary
any policy modifications must be endorsed by the ___ and ___ to the policy
insurer and attached
understanding age on a life application will mean a ___ death benefit will be paid
lower death benefit
how long does an insurer have to contest the validity of a claim based on false application information?
for 2 years following the issuance of the policy
what provision requires an adjustment in benefits if the insured’s age has been improperly recorded
the misstatement of age provision
within a contract where does an insurer make its promise to pay benefits?
in the insuring clause
which type of trust is created during the life of the insured?
an inter vivos trust
what right does the APL option provide to the insurer
the right to borrow from the cash value to pay overdue premium
if an insured’s age is misstated, what will eventually happen to any future claim?
the benefit will be adjusted to reflect the misstated age
what is the APL option designed to prevent?
the unintentional lapse of a policy
Explain the simultaneous death act (common disaster)
the assumption that the primary beneficiary died prior to the insured when both die in a common accident
a fixed interest rate of no more than ___ % may be assessed on a policy loan
8 %
T or F: any immediate family member may take a loan out against a person’s insurance policy?
false - only the policyowner has the right to take a loan out against a pokicy
the transfer of all policy rights to another party is referred to as ___
absolute assignment
is interest paid on a policy loan tax-deductable?
no
T or F: the entire contract provision is a mandatory provision
true
what clause is a summary of the entire contract and is usually found on the first or face page of the contract?
the insuring clause
identify the acronym: APL
automatic premium loan
___ is the transfer of some, but not all, policy rights to another party
collateral assignment
what would a parent use to change ownership of a child’s policy
an absolute assignment
is a grace period a required provision
yes
what is another name for the free-look provision?
the 10-day right to examine
A policy is said to be ___ after the contract has been issued for ___ or more years
incontestable after 2 years
The maximum loan value is equal to the ___ minus any projected ___
cash value / interest
how are monthly premiums generally paid?
by an electronic transfer through a bank
when would the APL option be activated?
following the expiration of the grace period
T or F: Everyone attempting to reinstate a policy within 3 years of its lapse date will be accepted
false
explain the concept of absolute assignment
the transfer of all policy rights to another
what is another name for the transfer of ownership
assignment
the minimum length of a free-look period is ___ days
10 days
what clause allows an insurer to pay a portion of the death benefit to an individual who paid for funeral expenses?
the facility of payment clause
is an insured afforded coverage during the grace period?
yes
list some examples of policyowner rights
name/change a beneficiary; select premium mode, receive dividends, take loans against the contract, assign benefits
a grace period is designed to prevent the ___ lapse of a policy
unintentional lapse
what percentage of a premium must be returned to the policyowner if a policy is returned during the free-look period?
100%
what type of assignment is used to secure a loan?
a collateral assignment
T or F: a whole life to term conversion with the same company does not require evidence of insurability
false, conversion from whole life to term will always require evidence of insurability
the ___ war exclusion only excludes benefits if death is the direct result of battle.
results war
name some common policy exclusions
war, private aviation, suicide (first 2 years) dangerous hobbies or occupations, and criminal acts
if death occurs with an outstanding policy loan, what is subtracted from the death benefit?
the remaining amount of the loan plus any accrued interest
what are the 4 common modes of premium payment?
annual, semiannual, quarterly, and monthly
define the term consideration
an exchange of values between two parties
list two examples of an owner’s right
the right to change beneficiary or premium payment mode
