Unit #4 Life Insurance Policy Provisions, Rider, Options, And Exclusion Flashcards
What’s does automatic loan provision do?
The insurance company ( insurer ) borrows the premium amount from your saving ( cash value ) to keep it enforce. Only for permanent insurance.
Under the premium loan provision, if an insured dies while a loan from the cash value is outstanding the outstanding balance of the loan is ?
It deducted from the face amount of the policy.
What is Collateral assignment ?
Example: its your saving or death benefit is used temporary use for a loan.
Absolute assignment is used for ?
It transfer ownership of the policy. (Permanent use)
If the insured commits suicide in first two years of the policy ?
The death benefit will not be paid because it has to be two years after.
So if an insured misstates his/her age or gender on the policy. What is the agent to do ?
The face amount of the policy will adjust what the premium would have purchase for the correct age and gender.
What does the nonforfeiture option does for the policy?
Allows the owner to keep the cash value if the policy lapses or is surrendered.
What are the three nonforfeiture options ?
Cash value surrender, reduced paid-up, and extended term
What is extended term?
Option to have term insurance with more protection but has no cash value.
Who issued a nonparticipating policy ?
The stock insurer
Does the beneficiary have to have interest to collect a life policy?
No, the beneficiary doesn’t need to have interest to collect the life policy
Primary, secondary, tertiary are order of succession. But anything after primary beneficiary are?
Contingent beneficiaries
What is revocable beneficiary ?
Intrested in the face amount and can be replace by the policyowner
Uniform simultaneous death act: if the beneficiary and the insured both died in a car crash, what is determine ?
It is assumed that the beneficiary died first and the insured died second .
What is the common disaster clause ?
If the insured doesn’t survive after the insured by few days. then the estate takes the policy.
How does the spendthrift clause protect the policy?
Spendthrift clause protects the policy proceeds from the policyowner or beneficiary creditors
What does the payment provision is allowed to do and is it found in the industrial policies ?
Yes, it is found in the industrial polices and payment provision pay all or part of proceeds to someone who is not named the beneficiary.
What does the entire contract consists ?
The policy and a copy of the application
Who has the right to change the policy ?
Only the executive officer of the insurance company has the right to change the policy
How long is the free look period and when does it begin ?
Its a 10 day free look period and it begins on the date of delivery not when the company issues the policy.
If the policy owner dies during the grace period, what will the beneficiary receive ?
The death benefit minus the unpaid premium
What must the insured do to reinstate his/her policy?
Apply within 3yrs, payback all premiums plus interest, pay back any outstanding premium loans, provide proof of insurability
What does the ownership provision allows you to do?
It allows policyowner to change beneficiaries
Premium payment modes and
Settlement options; the right to transfer or assign the policy;
And the right to own the cash value.
