Provisions, Options And Riders Flashcards
Representations & warranties
REPRESENTATION: is a written response to questions or statements made on an application for insurance and are correct to the best of his or her knowledge and on which the underwriter relies on to issue a policy. If statements are found to be untrue it will cancel the contract.
WARRANTY: is a statement that is guaranteed to be true if found to be untrue it voids the contract.
Grace period
Insured is entitled to a grace period of 1 month after one year that a premium payment may be made.
Reinstatement Provision
Allows a lapsed policy to be put back in force. Maximum time limit that one can let a policy lapse out with option to reinstate is 3 years. Evidence of insurability will be required. Is required to pay all past due premiums plus interest.
Advantage of reinstating as opposed to purchasing a new policy is that the lapsed pokicy will be restored to its original status.
• NOTE THAT A POLICY THAT HAS BEEN SURRENDERED CANNNOT BE REINSTATED!!!!!
Incontestability (Clause)
Prevents an insurer from denying a claim due to statements in the application after the policy has been in force for 2 years regardless of material misstatement of facts or concealment of a material fact. During the first two years an insurer may contest a claim.
Entire Contract
Is a provision that indicates that the policy and a copy of the application along with any riders or amendments, constitute the ENTIRE CONTRACT.
Payment of Claims and Interest on Proceeds
Settlement is usually made when the insurer receives due proof of death, once received payment should be made no later than 2 months.
If an insurer does not pay a first party claim within 30 days after receipt of acceptable proof of loss, the insurer will be required to pay interest at the legal rate from the date the claim is received by the insurer.
Misstatement of Age
Age of an insured affects the premium that will be charged for a life insurance policy. Insurer has the right to adjust the benefit to an amount that the premium would have purchased at the correct age.
Right to Examine (free look)
Provision that allows the policyowner 10 days from policy delivery date to look over the policy and policy can be returned for a full refund of premium already paid.
