Life Insurance Policy Provisions options and riders

Question 1

What is third party ownership?

Answer 1

when the owner and the insured are not the same person.

Question 2

What is the assignment provision?

Answer 2

specifices the polciy owners right to assign (transfer ownership) the policy.

Question 3

what are the two types of policy assignment?

Answer 3

1. absolute assignment

2. colleteral assignment

Question 4

What is absolute assignment?

Answer 4

involves transferring all rights of ownership to another person.

Question 5

what is colleteral assignment?

Answer 5

involves transfer of partial rights to another person. Ussually done to secure a loan.

Question 6

what is entire contract provision?

Answer 6

says that the policy a copy of the application along with any riders or amendments constitutes the entire contract.

Question 7

what is the right to examine provision?

Answer 7

also known as the free look period. Allows the policy owner 10 days to look over the policy and return it for the full premium back. Free look starts when the policy owner receives the policy.

Question 8

what is the grace period?

Answer 8

allowed to pay premium one month late before premium lapses.

Question 9

what is reinstatement?

Answer 9

allows policy to be reinstated after it lapses. Usually 3 years is the maximum time frame. Hasve to provide proof of insurability and premiums plus interest.

Question 10

What is incontestability?

Answer 10

prevents insured from denying claims due to information in an application after the policy has been enforce for 2 years.

Question 11

What is settlement of death benefit?

Answer 11

claim for life insurance willl be made with receipt of proof of death. Insured cannot make that time more than two months.

Question 12

What are the exlcusions?

Answer 12

1. aviation
2. hazardous occupations or hobbies
3. war or military service.

Question 13

What is the suicide provision?

Answer 13

death benefit will nto be paid on a suicide unless the policy has been inforce for 2 years.

Question 14

What is the primary beneficary?

Answer 14

the first claim to the policy proceeds.

Question 15

what is the contingent beneficary?

Answer 15

has second claim to policy benefits in the eventthe primary beneficiary dies before the insured.

Question 16

What is revocable?

Answer 16

policy owner can change a beneficary without the knowledge or permission of the beneficary.

Question 17

what is irrevocable?

Answer 17

may not be canged without the written consent of the benefiacry.

Question 18

what is common disaster clause?

Answer 18

if the prmary and the isnured die at the same time its assumed the primary beneficiary died first so it goes the contingent beneficiary or the insured estate.

Question 19

What is the spend thrift clause?

Answer 19

protects beneficaries from claims of the creditors.

Question 20

what is policy loan?

Answer 20

can take out a loan against the policy. Have to give 30 days written notice. Insured can defer for 6 months.

Question 21

What is the formula for loan value?

Answer 21

loan value= cash value -(unpaid loans + interest)

Question 22

What is automatic premium loan provision?

Answer 22

prevents unintentional lapse of policy due to non payment of premium.

Question 23

What is partial withdraw?

Answer 23

universal life policies allow partial withdraw of cash value. There is a charge for each withdraw and limits to how much you can withdraw.

Question 24

what is a rider?

Answer 24

optional coverage you can add to a policy for additional cost.

Question 25

What is the waiver of premium?

Answer 25

waives the premium if the insured becomes totally disabled usually has a 6 month waiting period until premium is waived. If they are still disabled insurance company will refund premium to start of disability.

Question 26

what is the disability income benefit?

Answer 26

in the event of disability premiums are waived and the insurer will pay a monthly benefit.

Question 27

what is the payor benefit?

Answer 27

aka juvienille insurance. If a parent or guardian becomes disabled or dies the insure will waive premium until the minor reaches a certain age like 21

Question 28

What is the other rider insurance?

Answer 28

a level term insurance that covers one or more family members aka as a family rider or spouse term rider.

Question 29

what is a childrens term rider?

Answer 29

allows children to be added for a certain period of time.

Question 30

what is a family term rider?

Answer 30

spouse term + childrens term

Question 31

what is an accidental death rider?

Answer 31

pays some multiple of the face amouunt if accidental death. death must occur within 90 days. benefit is normally 2 times the faceamout known as double indemnity.

Question 32

what is guaranteed insurabilty?

Answer 32

allows insured to purhcase addtional coverage the specified future dates without evidence of insurability for additional premium. rider usually expires at age 40

Question 33

what is cost of living rider?

Answer 33

addresses inflation factor automatically incresing amount of insurance without proof of insurabillity.

Question 34

what is the return of premium rider?

Answer 34

incresing term insurance when added to a whole life policy issues death prior to given age. you get face amount plus amount equal to all premiums paid.

Question 35

what is accelarated living benefit?

Answer 35

given benefits early if the inusred is diagnosed with terminal illness that will result in death in 2 years.

Question 36

what is living needs rider?

Answer 36

pays part of death benefit if insured is diagnosed with a terminal illness that will result in death in 2 years.

Question 37

what is cash surrender value?

Answer 37

policy owner surrenders the policy for current cash value at the time when coverage is no longer affordable or needed.

Question 38

what is extended term rider?

Answer 38

insurer uses policy cash value to extend the life of the policy.

Question 39

what is reduced paid up insurance?

Answer 39

uses cash value to pay off policy. Now has a reduced face amount.

Question 40

what are the dividend option?

Answer 40

1. cash payment
2. reduction of premium payments
3. accumulation at interest
4. paid up additions
5. one year term option

Question 41

what is life income or straight life?

Answer 41

recieves benefits the beneficary cannot outlive.

Question 42

what is single life?

Answer 42

provides single beneficary income for their life.

Question 43

what is joint and survivor?

Answer 43

two or more recepiants recieve benefits for as long as they are alive.

Question 44

what is life with period certain?

Answer 44

guarentees payment for as long as they live and for a certain period of time.

Question 45

what is joint life with term certain?

Answer 45

pays 2 or more people and stops payment on the first death. unless their was a specified term.

Question 46

what is life refund?

Answer 46

either cash refund or installmendt refund pays complete annuity.

Question 47

what is is interest only?

Answer 47

insurance company retains policy and pays interest to beneficairy.

Question 48

what is fixed period installments?

Answer 48

aka period certain specified years are chosen and they get equal installments.

Question 49

what is fixed amount?

Answer 49

pays fixed amount of money until the money is gone.