life insurance provisions, options, and riders

Question 1

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.

Answer 1

insuring clause

Question 2

consists of completing the application and paying the initial premium. the amount and frequency of premium payments are contained in this.

Answer 2

consideration clause

Question 3

giving the policyowner additional time to pay overdue premiums.

Answer 3

grace period

Question 4

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.

Answer 4

reinstatement

Question 5

prohibits the insurer from questioning the validity of the contract after a certain period of time has elapsed.

Answer 5

incontestable clause

Question 6

allows the insurer to adjust the policy benefits if the insureds age or sex is misstated on the policy application

Answer 6

misstatement of age or sex

Question 7

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.

Answer 7

policy loan provisions

Question 8

allows the insurer to automatically use the policy cash value to pay an overdue premium. there is no cost for this premium

Answer 8

automatic premium loans

Question 9

also know as Dependent riders may be added to a primary policy to cover a spouse, child or adopted children

Answer 9

other insured provision

Question 10

defines the person who may name and change beneficiaries, and receive any financial benefits from the policy.

Answer 10

owners right provision

Question 11

the right to transfer policy rights to another person or entity. the new owner is known as the assignee.

Answer 11

assignment clause or provisions

Question 12

when the assignee receives full control of the policy and rights to the policy benefits from the current policyowner

Answer 12

absolute assignment

Question 13

partial or temporary transfer of rights to another person or entity. usually for securing a loan with a creditor.

Answer 13

collateral assignment

Question 14

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

Answer 14

free look

Question 15

describes the policyowners obligation to notify the insurance company pf a claim

Answer 15

notice of claim

Question 16

the companys responsibility to supply this to an insured within 15 days after receiving notice of claim

Answer 16

claim forms

Question 17

the statement that an insured must give an insurance company to show that a loss occurred

Answer 17

proof of loss

Question 18

provides for immediate payment of the claim after the insurer receives notification and proof of loss

Answer 18

time of payment claims

Question 19

am insurance contract that specifies how and to whom claim payments are to be made.

Answer 19

payment of claims

Question 20

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.

Answer 20

physical exam and autopay

Question 21

where the policyowner indicates who is to receive the proceeds.

Answer 21

beneficiary designation

Question 22

the insured, as policyowner, may change the beneficiary designation at any time unless a beneficiary has been named irrevocably.

Answer 22

change of beneficiary

Question 23

where the ways in which the proceeds can be paid out or settled are explained

Answer 23

settlement options/payment of claims

Question 24

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.

Answer 24

excess interest provision

Question 25

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.

Answer 25

discretionary provision

Question 26

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.

Answer 26

change of occupation

Question 27

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.

Answer 27

unpaid premiums

Question 28

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.

Answer 28

cancellation

Question 29

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.

Answer 29

conformity with state statutes

Question 30

this provision specifies that the insurer is not liable for losses attributed to the insureds being connected with a felony or participation

Answer 30

illegal occupation

Question 31

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.

Answer 31

right to defer loan

Question 32

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.

Answer 32

the policy face

Question 33

allows a policyowner to purchase additional life insurance coverage at specified dates without providing evidence of insurability.

Answer 33

guaranteed insurability option rider

Question 34

provides waiver of premiums if the adult premium payor should die or becomes totally disabled.

Answer 34

payor provision (rider)

Question 35

provides an additional amount of insurance usually equal to the face amount of the base policy if cause of death was an accident.

Answer 35

accidental death benefit rider (double indemnity)

Question 36

when an insurance company doesnt cover a loss due to a specific condition the insured has.

Answer 36

waivers for impairments

Question 37

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

Answer 37

cash surrender

Question 38

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

Answer 38

extended term option

Question 39

the policyowner pays no more premiums but the face amount is decreased

Answer 39

reduced paid-up option

Question 40

allows the policyowner to waive premium payments during a disability and keeps the policy in force. does not provide cash payments to the policyowner.

Answer 40

waiver of premium rider

Question 41

if the person paying the premiums on a juvenile life policy becomes disabled or dies, the payor rider ensurers that premiums will be waived

Answer 41

payor rider

Question 42

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

Answer 42

accelerated benefit rider

Question 43

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

Answer 43

accidental death benefit rider

Question 44

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

Answer 44

accidental death and dismemberment

Question 44

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.

Answer 44

guaranteed insurability rider

Question 45

allows the policy face amount to be adjusted for reasons doe to inflation based on the consumer price index.

Answer 45

cost of living rider

Question 45

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

Answer 45

automatic premium loan rider

Question 46

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

Answer 46

return of premium rider

Question 47

this rider permits a policyowner to exchange a life insurance policy for another in the future if desired.

Answer 47

exchange privilege rider