life insurance provisions, options, and riders Flashcards
the insurers promise to pay specified benefits to a designated person in the event of a covered loss. part of health insurance policy that states the kind of benefits provided and the circumstances under which they will be paid.
insuring clause
consists of completing the application and paying the initial premium. the amount and frequency of premium payments are contained in this.
consideration clause
giving the policyowner additional time to pay overdue premiums.
grace period
permits the policyowner to reinstate a policy that has lasped, as long as the policyowner can provide proof of insurability and pays all back premiums, outstanding loans, and interest.
reinstatement
prohibits the insurer from questioning the validity of the contract after a certain period of time has elapsed.
incontestable clause
allows the insurer to adjust the policy benefits if the insureds age or sex is misstated on the policy application
misstatement of age or sex
policies that have cash value also have policy loan and withdrawal provisions. must build cash value after a certain number of years. policyowner has the right to the policys cash value and the loan isnt taxable.
policy loan provisions
allows the insurer to automatically use the policy cash value to pay an overdue premium. there is no cost for this premium
automatic premium loans
also know as Dependent riders may be added to a primary policy to cover a spouse, child or adopted children
other insured provision
defines the person who may name and change beneficiaries, and receive any financial benefits from the policy.
owners right provision
the right to transfer policy rights to another person or entity. the new owner is known as the assignee.
assignment clause or provisions
when the assignee receives full control of the policy and rights to the policy benefits from the current policyowner
absolute assignment
partial or temporary transfer of rights to another person or entity. usually for securing a loan with a creditor.
collateral assignment
the policyowner has a certain number of days once the policy is delivered to look over it and return it for a refund of all premiums paid
free look
describes the policyowners obligation to notify the insurance company pf a claim
notice of claim
the companys responsibility to supply this to an insured within 15 days after receiving notice of claim
claim forms
the statement that an insured must give an insurance company to show that a loss occurred
proof of loss
provides for immediate payment of the claim after the insurer receives notification and proof of loss
time of payment claims
am insurance contract that specifies how and to whom claim payments are to be made.
payment of claims
this provision entitle a company, at its own expense, to make physical examinations of the insured at reasonable intervals during the period of a claim, unless its forbidden by state law.
physical exam and autopay
where the policyowner indicates who is to receive the proceeds.
beneficiary designation
the insured, as policyowner, may change the beneficiary designation at any time unless a beneficiary has been named irrevocably.
change of beneficiary
where the ways in which the proceeds can be paid out or settled are explained
settlement options/payment of claims
if a beneficiary decides to leave life insurance proceeds with an insurer following the death of the insured, the insurance company must pay interest on the proceeds. the interest credited to or paid to the beneficiary is taxable as ordinary income.
excess interest provision
limits the way a court can review a claim denial and makes it difficult for the court to conduct a fair review of the claim. some states have laws to prohibit this because they are designed to protect the insurance company.
discretionary provision
allows the insurer to reduce the max benefit payable under the policy if the insured switches to a more hazardous occupation or to reduce the premium rate if changes to a less hazardous occupation.
change of occupation
if there is this at the time a claim becomes payable, the amount of the premium is to be deducted from the sum payable to the insured or beneficiary.
unpaid premiums
prohibited in some states. gives the company the right to cancel the policy at any time with 45 days written notice to the insured. also must be given when the insurer refuses to renew a policy or change premiums rates. if its for nonpayment of premium, the insurer must give 10 days written notice to the insured, unless the premiums are due monthly. also allows the insured to cancel the policy any time after the policys original term has expired by notifying the insurer in writing.
cancellation
any policy provision that is in conflict with state statutes in the state where the insured lives at the time the policy is issued is automatically amended to conform with the minimum statutory requirements.
conformity with state statutes
this provision specifies that the insurer is not liable for losses attributed to the insureds being connected with a felony or participation
illegal occupation
provision grants the right to an insurer to defer a policy loan or the payment of the cash value. this right does not apply to the payment of death claims. its designed to protect an insurer if a large amount of policyholders desire to make withdrawals at the same time.
right to defer loan
contains a summary of the type of policy and the coverage provided by the policy. it identifies the insured, the term of the policy, and how the policy can be renewed.
the policy face
allows a policyowner to purchase additional life insurance coverage at specified dates without providing evidence of insurability.
guaranteed insurability option rider
provides waiver of premiums if the adult premium payor should die or becomes totally disabled.
payor provision (rider)
provides an additional amount of insurance usually equal to the face amount of the base policy if cause of death was an accident.
accidental death benefit rider (double indemnity)
when an insurance company doesnt cover a loss due to a specific condition the insured has.
waivers for impairments
allows the policyowner to receive the policys cash value. policyowner no longer has coverage. the max length of time a life insurance company may legally defer paying the cash value of a surrendered policy is 6 months
cash surrender
allows the policyowner to use the policys cash value to buy level, extended term insurance for a specified period. no premium payments are made. the coverage provided with the extended term nonforfeiture option is equal to the net death benefit of the lasped policy
extended term option
the policyowner pays no more premiums but the face amount is decreased
reduced paid-up option
allows the policyowner to waive premium payments during a disability and keeps the policy in force. does not provide cash payments to the policyowner.
waiver of premium rider
if the person paying the premiums on a juvenile life policy becomes disabled or dies, the payor rider ensurers that premiums will be waived
payor rider
allows the insured to receive a portion of the death benefit prior to death if the insured has a terminal illness and expected to die within 1-2 years. whatever amount is withdrawn in an accelerated death benefit will decrease the death benefit when death occurs
accelerated benefit rider
pays an additional sum to the beneficiary if the insured dies due to an accident. cheapest way to add a lot of coverage for a period of time
accidental death benefit rider
may be added to a life insurance policy. pays benefit for dismemberment and accidental death. pays a principal sum for loss of both hands, arms, legs, or vision in both eyes
accidental death and dismemberment
lets the policyowner to buy additional permanent life insurance coverage at specific points of time without submitting proof of insurability. usually the benefit is allowed every 3 years, up to the orginal face amount of the policy.
guaranteed insurability rider
allows the policy face amount to be adjusted for reasons doe to inflation based on the consumer price index.
cost of living rider
allows the insurance company to deduct overdue premium from an insureds cash value by the end of the grace period if a payment is missed on a life policy
automatic premium loan rider
pays the total amount of premiums paid into the policy in addition to the face value, as long as the insured dies within a certain time period specified into the policy. also returns premiums to the living insured at the end of a specified period of time, as long as the premiums have been paid
return of premium rider
this rider permits a policyowner to exchange a life insurance policy for another in the future if desired.
exchange privilege rider
