Life Provisions Flashcards
absolute assignment
assignee receives full control over the policy and full rights to its benefits
accidental death benefit rider
pays an additional sum to beneficiary if insured dies due to accident. amount paid is a multiple of face amount (i.e. doubled, tripled)
accelerated benefits rider
allows insured to receive death benefits before death if the insured has a terminal illness and is expected to die within 1-2 years. whatever is drawn before death will decrease the death benefit when death occurs
accumulate interest option
allows policy owners to leave dividends with insurer to acclimate interest, and will be required to pay taxes on interest acclimated
assignment clause
a policy owner can can transfer rights to another person
automatic premium loan provision
the insurance company can automatically take out a loan for you against your cash value to cover your premium if you don’t make payment when it is due. this continues until you make a payment, or you run out of cash value
cash option
allows the policy owner to cash out the dividends they receive
cash surrender option
allows policy owner to receive the policy’s cash value. typically policy owner no longer has coverage
collateral assignment
assignment of a policy to a creditor as security for debt
consideration clause
a policy owner must pay premium in exchange for insurer’s promise to provide benefits; consists of actual application and paying initial premium
dependent riders
added to additional insurers through the use of dependent riders
dividend options
options a policy owner has while receiving dividend payments from an insurance company
entire contract provision
states the insurance policy itself, and riders, and the application comprises the entire contract between all parties
exclusions
portions of the insurance policy stating the policy will not cover certain risks
extended term option
permits to policy owner to use the policy’s cash value to buy level, extended term insurance for a specified period
free look period
policy owner has a set amount of days in which they can return the policy for full refund of premium
grace period
period time after payment date during which the policy remains in force without penalty, typically 1 month. if policy holder dies during grace period, beneficiary receives face amount of policy minus any required premiums
guaranteed insurability rider
permits policy owner to buy additional life insurance coverage at predetermined intervals w/o insurability. includes marriage and birth, w/o insurability; usually 3 years up to face amount of policy
incontestable provision period
insurance company may not contest to validity of policy once policy hits 2 years
insuring clause (agreement)
part of the policy in which the insurer’s agreement to pay coverage in the event of a loss
misstatement of age/sex
allows insurers to adjust the benefits payable if the age/sex of the insured was misstated a the creation of the policy
nonforfeiture options
options you have for your cash value if you terminate a policy with cash value
one year term option
allows policy owner to exchange the dividend for additional coverage in the form of a 1-year term policy
paid up additions option
allows policy owner to exchange dividend for an additional single payment of whole life policy
payor provision
waives future payments for juvenile life insurance policy of the insured dies or becomes disabled
policy loan (cash withdrawal) provisions
said policies must first gain cash value after a certain number of years, and these loans with interest cannot exceed the cash value. this is NOT taxable. any loan due at time of death will be deducted from insured’s policy
reduced paid-up option
nonforfeiture option allows policy owner to reduce policy benefit amount and in turn stop making payments
reduced premium payment
allows policy owner to return the dividend payment to the insurer in exchange for reduction in the following year’s premium payment
reinstatement provision
permits policy owner to reinstate policy that has lapsed as long as policy owner provides proof of insurability and pays all back-premiums, outstanding loans, and interest
return of premium rider
pays the total amount of premiums paid into the policy as well as the face value, so as long as the dies within the specified time of the policy
suicide clause
policy will be voided and no benefit will be provided if the insured commits suicide within 2 years of the policy insurance
waiver of premium rider
premium payments are waived by insurer if the insured becomes disabled; this is not a loan
