Policy provisions & riders Flashcards
Waiver of premium
Waives premium if insured becomes totally disabled.
Expires at 65.
Total disability
Inability to work at all
Waiver of Premium with Disability income
Premiums waived
Monthly income paid based on face value of policy
Guaranteed Insurability
Can purchase more coverage
Specified date/ special event
Additional premium
Does guaranteed insurability require evidence of insurability?
No
Payor benefit
For children
if payor is disabled for six months/dies - premiums are waived to certain age
Accidental death (how many days?)
90 to pay double indemnity
Term riders
Additional temporary insurance
No additional policy
Greater protection, reduced cost
Reinstatement
Lapsed policy
3 year max
Evidence of insurability
Restored to original status & retains original values
Incontestability
Insurer can’t deny claim after it’s been in effect for
2 YEARS
Absolute Assignment (transfer)
ALL right of ownership
No insurable interest necessary
Collateral Assignment (transfer)
Transfer partial rights to another
If someone commits suicide, what are the payouts?
before 2 years - refund of premium
after 2 years - pay death proceeds as normally
What is a surrender charge?
. Fee when policy/ annuity is surrendered for cash value
What is reduced paid-up insurance?
Cash value used as one-time premium
Purchase permanent, paid-up policy
Reduced face amount from other policy
Builds own cash value
What is extended term (nonforfeiture)?
Cash value to convert term insurance
Same face amount as former policy
Last as long as the cash value can purchase
What are dividends?
Return of excess premiums.
Are dividends taxable?
No.
Are dividends guaranteed?
No.
Dividends: Accumulation at interest
Dividends kept in acct to accumulate interest
When can policyowner withdraw dividends from accumulation at interest?
Any time.
Dividends: Paid-up additions
Dividends buy single premium policy
Increase death benefit on original policy
Dividends: Paid-up option
Dividends plus interest and cash value
Pay off early!
Dividends: One year term
Dividends buy more one-year insurance
Increases death benefit
Dividends: Acceleration of Endowment
Dividends plus interest used to shorten endowment period
What is the waiting period for the waiver of premium?
6 months
What nonforfeiture option will be automatically chosen if the policyowner has not chosen one?
Extended Term
