chapter 5 life insurance policy Provisions, options, and riders

as contracts of adhesion, insurance policies must be accepted____ . however after the insurer issues the prophecy, certain changes are _____. depending on the type of policy, these changes can be made without having to _____

"As is" by the applicant / allowed/ write a new policy

what does aviation exclusion exclude in life insurance ?

Ace Clues death as a result of operating, writing, or descending from an aircraft unless the insured is a passenger in the aircraft is operated commercially to transport passengers For Hire or by private business to transport Personnel or guest. Typically today only private Aviation is excluded for example you flying your own plane

explain the conditions for LTC payments

LTC Rider benefits become payable when the insured is diagnosed as chronically ill, for either a medical or cognitive ( Mental Health) Brazen. If for a medical reason, then the insured must be certified as unable to perform at least two activities of daily living ADLs for at least 90 days. In for a mental health reason than the insured must prove to his or her health or safety would be at risk without supervision. The insured must be certified within the previous 12 months

what does hazardous hobbies in occupation exclusion exclude in life insurance?

a death benefit if the insured dies as a result of his or her occupation or hobby, alternatively some policies allow coverage of these risks. But they would charge an additional premium if the insured engages in these activities. Typically this would include racing, mountain climbing, hang gliding, scuba diving, or extreme sports

explain disability income benefit Rider does it include a provision for a waiver of premium

a disability income benefit Rider pays a certain sum of monthly income to the insured if he or she becomes disabled. This contrasts with the waiver of premium Rider, which only weighs the policy premiums or provides no disability income. The monthly income provided under a disability income benefit Rider may be paid for as long as a disability last or for some shorter, Limited period . if the insured recovers, the monthly disability payments stop. most disability income benefit Riders also include a provision for a waiver of premium. Another word for disability income right or what is the policies premiums while providing monthly income payments. So when a person by the disability income Rider, he or she does not have to buy a waiver of premium

explain (accelerated) living benefit provision/Rider

a fairly recent innovation, living benefit Riders are designed to provide financial support while the insured is living. The support becomes necessary if he or she faces a terminal illness. These Riders were created in response to the rise of viatical settlements. This allows the owner access to some of the face amount without having to sell the policy to another. Likewise, it may be necessary if the insured faces the cost of long-term medical care or assistance. With a living benefit Rider, a portion of life insurance death benefit becomes accessible in the event of a terminal illness or the need for long-term care

explain spouse/ other insured term Rider what age does this coverage end?

a person could buy and other insured life writer to cover the life of a spouse( or other adult with an insurable interest ) usually the coverage ends at age 65 because the intent of this coverage is temporary term life insurance Riders on spouses are often bought to provide additional coverage while children is still young and to ensure needed additional funds in the event the other covered spouse dies

in addition to being designated as primary or contingent beneficiaries can also be named as either revocable (changeable) or irrevocable. Explain the difference .

a revocable beneficiary ( the most common) has no right in or to the policy during the insurance lifetime. a revocable beneficiary has only and expectancy that he or she may receive the death benefit. The policy owner can revoke or change revocable beneficiaries at will the policy owner needs simply provide written notification to the insurance company. in contrast, an irrevocable beneficiary has a vested interest in the policy. Without their irrevocable beneficiaries written consent, the policy cannot change a beneficiary who has been named irrevocably. furthermore, the policy cannot change anything in the policy that affects the rights of the irrevocable beneficiary without first getting the beneficiaries consent. As an irrevocable beneficiary they also have the right to pay premiums to prevent a lapse in coverage.

what is a Policy rider? what are the most popular Insurance Riders?

a rider allows life insurance applicants to customize policies to their specific needs. Writers add an additional level of protection in some form, and they usually come at a modest cost. of all the most popular life insurance Riders are those that are designed to provide additional benefits in the policy owner becomes disabled. For this purpose, the insurer is generally offered three Riders

explain accelerated benefit rider typically how much death benefit does the provision allow up to? what happens to the benefits that stent distributed ?

accelerated death benefits are made available either the rider or a provision of the policy itself. They're typically available without an accelerated benefits provision (or rider) allows a payout of some portion of the policies death benefit while the insured is still living . most of these Riders pay less than the full face value as an accelerated benefit. In other words some portion of the death benefit payment is accelerated and paid while the insured is still alive. The typical provision allows up to 50% of the death benefits to be available, though some policies allow up to 100%. The insured can then use the funds for a range of needs, from standard living expenses to Medical Care or for anything else he or she wants any amount of death benefit not distributed through an accelerated benefits provision remains payable to the policies named beneficiary of the insured's death

explain the effects of accelerated benefit on policies death benefit will exercising this option have any effect on the premium?

accelerated life insurance benefits are typically limited to something less than the full death benefit. upon the insured's death, the insurer Payson that death benefit to the beneficiary. Some companies also deduct an interest charge from the death proceeds to compensate for interest lost due to the accelerated payment exercising this option may or may not have any effect on the premium some companies will waive the premium upon exercise, Others May reduce the premium ans with others it may have no effect on the premium

by comparison, a Policy rider adds what?

additional benefits or an additional provision to a base policy. Hence a rider get their name because they sit on top of or "ride", on a policy. as a result, riders and the additional benefits they provide almost always involve additional premiums

explain payor benefit ( juvenile insurance) what's age of majority ?

all the previous Riders require the disability of the insured as a trigger. If the insured and owner are different the insured disability does not affect the payment of premiums. For example when a child life is insured, and adult (usually a parent ) pays the premiums however a payor (the adult ) may become disabled or die, leaving the policy open to laps it's a premium is unpaid. a payor benefit Rider avoids this problem. It ensures that the insurance stays enforced by waving the premium payment if the premium payer dies or becomes disabled by the insured is still generally, the payer becomes totally disabled or dies and the waiver usually stays in effect until the payor recovers or the child reaches a certain age typically the age of majority, 18 -21.

what happens if a minor is named as a beneficiary?

are the policyowners free to designate any person or entity as the policies beneficiary there are many starting consequences if the beneficiary is a minor. insurance companies do not pay the proceeds of life insurance policy to reminder because of minor does not have the legal capacity to sign a binding receipt for the funds. Nor does the minor had the legal capacity to release the insurance company from the commitment. For these reasons, the insured normally requires the court to appoint a legal guardian who will be a fiduciary who are the child before paying out proceeds to a minor child. However, since the minor child is automatically entitled to the insurance proceeds upon reaching the age of majority, to protect the child from their possible bad decisions, the policyowners typically set up trust to manage the insurance proceeds for the child

all permanent life insurance policies allow policyowners to ____ from the insurer and amount up to the cash surrender value and their policies. That's against the cash value are normally available after the policy in force for a specified time, typically _____. Usually the policy owner can borrow the entire _____ value less any prior Dept against the policy. although the policy owner is not required to pay cash value loan, unpaid interest is ______ ( that is the unpaid interest is added to the outstanding loan balance) as long as the total amount of loan plus interest is not _____ the cash surrender value, the policy remains in effect . yes the loan amount plus accrued interest over exceeds cash value, then the policy is cancelled if it appears that the policy mail apps because of the loan, the insurer must inform the owner at least ________ of the possible apps to allow the payment of loan or at least the accrued interest. the insurer has the right to make the owner wait up to ______, although in actual practice this rarely occurs

borrow / 3 years / cash surrender /capitalized / greater than / 30 days in advanced / 6 months for payments of a cash loan

explain per stirpes giv an ex

death benefit proceeds are shared equally by a class or group of individuals for example of the insured adult children , or the insurance brother and sister, or the insurance friends Tom Dick and Harry, and if one of them predeceases the insured then his or her share passes down to his or her children if any in this case the branch of the family becomes the class number however it only pass down by Blood not marriage

explain per capita (per head) give examples

death benefit proceeds are shared equally by classes or group of individuals ex ( the insurance adult children, or the insurance brother and sister, or the insurance friends Tom Dick and Harry) and if one of them per seeds the insured, they are no longer a cast member and their share is divided equally among the surviving class members no share of the proceeds is passed down to the deceased beneficiaries children

what is provision (conditions)? in a life insurance poolicy

describe the rights are responsibilities of the parties to contract and explain how the policy Works. Certain Provisions are required or standard in any policy. Others are options or writers that policy owner can choose to add. Provisions are pretty standard across all policies

if a policy owner wants to cover a group of beneficiaries without specifically naming them the owner can do what? please give an example

designate a class or group of beneficiaries as opposed to naming each individually ex : my children is a class designation. This way policy proceeds will be paid to children born (known) and those not yet born (unknown). However, any person who could provide they were a class member (in this case a child of the insured) at the insured's death would also be considered a beneficiary

what do options do in a life insurance policy ?

enable policyowners to apply the provisions of a policy to suit their needs. Options typically described but the options available to pay out a sum of money available in the contract

what does the suicide provision exclude in life insurance?

exclusive death by Suicide during the first two years following policy issue. After the two-year period passes, dead by Suicide is covered. The purpose of this provision is to deter those who take out a policy solely to gain a benefit for their family by committing suicide. If death is caused by Suicide within the initial two-year period, the policy must provide for the return of the premiums paid on the policy

with the free-look provision it must be on the _____ of the policy and state that the policyholder is _____ to return the policy within a period of not less than ____ of its delivery to the policyholder. If replacement of insurance is involved the policyholder is permitted to return the policy within a period Of not less than ____ of its delivery to the policyholder. It's a policy was solicited by direct-response insurer rather than through a ____, the provision must stay that the policyholder is permitted to return the policy within a period of not less than _____ the entire premium paid by the policyholder must be returned immediately to the policyholder

first page / permitted / 10 days / 20 days / licensed insurance agent/ 31 days/

all life insurance policies contain a common disaster provision. What is this provision identify?

how the policy proceeds will be paid if the insured and the primary beneficiary died at the same time and example in an automobile accident

all forms of perminate life insurance have a cash value element as long as the policy remains _____ is cash value grows over the life of the policy. the policy owner owns this cash value. If a policy ___ or is surrendered, the policy owner cannot be ___ of cash value. In other words, those amounts cannot be ____ to the insurance company. all permanent polices include nonforfeiture options that provide ways for the owner to obtain cash value

in force /lapses / deprived / forfeited

what is a spendthrift clause? what does it only protect?

is another, life insurance policy provision. It stays that creditors cannot claim any of the death proceeds for they are paid out to the beneficiary, thus preventing the beneficiaries creditors from forcing the insurer to pay the death proceeds directly to them (the creditors ) it only protects death benefit proceed as they are paid from the insurer to the beneficiary. It does not protect proceed once they are in the beneficiary's possession

beneficiaries baby designated primary or contingent, what is the primary beneficiary?

is the first person or class of persons in line to receive the death benefits. Primary beneficiaries receive these benefits of their living when the insured dies.

what is the grace period ?

is the period of time after a modal premiums due date that the insurer will accept a late payment without lapsing the policy

what does an extended term insurance option allow? what happens when no other option other than extended term is elected?

it allows the policy owner to have insurance coverage for some. With no further premium payments required, if the owner surrenders the policy of fails to choose one of these nonforfeiture options oh, the insurer typically apply the extended term insurance option automatically when no other option is elected

what does fixed amount option distribute? flight the fixed period Option, the fixed amount option distributes both what? just like fixed period Options toupees mortality does what?

it distributes the death benefit through a series of payments to the beneficiary. But this option the policy owner or beneficiary designates the payment amount, and the time. Depends on the sides of the death benefit. With the fixed amount settlement option, the larger the periodic payment amount , the shorter the payout time period the fixed amount option distributes best death benefit and interest earned on the funds held by the insurer during the distribution period . payments can be made monthly, quarterly, semi-annually, or annually. the pay is mortality does not affect the amount of the duration of payment under this option if payee dies before the all the proceeds are paid out, payment continue to the contingent beneficiary named by the beneficiary until all payments have ended

does permanent life insurance cash values support the policies death benefit, and what else does it do?

it does support the policies death benefit, they can also be used to provide certain living benefits. Policyowners obtained he's living benefits by accessing policy cash values through policy loans, withdrawals, and partial surrenders. The policy owner is free to use these funds for any purpose

what does the guaranteed insurability rider guarantee? what is the policy owner decides not to buy any additional life insurance policies?

it guarantees that the policy owner can buy additional permanent life insurance on the insured's life in the future even if the insured has become uninsurable as evidence of insurability is not required. guaranteed insurability Riders by the policy owner buy more life insurance of a specified amount and specify policy anniversaries. Such anniversaries are usually in 3-year intervals nearest the insurance age of 25, 28, 31, 34, 37, and 40. it's a policy owner decides not to buy any additional life insurance policy under the rider on an option date, that option is lost and the policy owner must wait until the next option date to increase coverage. In addition today's specify option dates, the writer May provide alternative option days to recognize special life events including marriage and the birth (or adoption) of a child. Exercising an option on his special bases eliminates the next scheduled option date. Premiums for the policy bought under a guaranteed insurability rider option are based on the insurance attained age when the option is exercised

what is a life insurance policy?

it is a legal contract. It also has legal obligations, ownership right, and exclusions or limitations that extend to any contract. The features and functions of any particular policy are described in the contract provision, options, and related Riders

what is a trust as a beneficiary? what happens when a trust is designated as a beneficiary of a life insurance policy?

it is a legal entity established to own and hold property or assets for the benefit of another person or group of people a trust may be designated as the beneficiary of a life insurance policy. And this case, a trustee manages the policy proceeds as the fiduciary for the trust beneficiaries and must manage and distribute the funds as specified and the trust language. Although guardianship for a child sees that majority, trust me last four decades or longer

what is a family term Rider?

it is an alternative to either a separate spousal writer or separate children's writer. This writer covers multiple family members (spouse plus children) equally with term insurance

what is a dividend?

it is an amount returned to a policy owner out of an insurance companies Surplus buns. In a practical sense it is a return of premiums that exceed the insurance expenses & mortality experience. Only participating policy produce dividends. the policy owner decides in advance how he or she wants the dividend to be applied based on the options available for the policy

in settlement of an options with a life contingency the payment amount is based on the payee so what? And all other factors being equal, and what kind of beneficiary will receive smaller payments then the other beneficiary?

the payment amount is based on the patient's life expectancy, but the longer life expectancy you think smaller periodic payments. a younger beneficiary will receive smaller payment than the older beneficiary. On the other hand the younger payee can accept payments to be made over a longer. Of time than the older beneficiary.

what is an automatic premium loan provision? what does the APL provision direct the insurers to create? can they be postponed?

it is an optional provision that a life insurance applicant can it looked at the time the policy is purchased. This benefit may also be requested after the policy is issued, in which case it is added to the policy as a rider. Either way, there's no charge for this benefit a cash value loan to pay premiums due at the end of the policy's grace period. the purpose of the APL is to prevent a policy from lapsing its policy owner forgets to pay the premium ( or simply can't pay it when due) request for automatic premium loan cannot be postponed up to 6 months they must be processed when requested to avoid a lapse

what is the waiver of premium Rider?

it is one of the most common and popular writers added to a life insurance policy. Under this Rider, the policies premiums are waived if the insured becomes totally disabled for. Stated in the rider. Last waiver of premium Riders require that the insured be totally disabled from six months before the waiver begins. This is called the "waiting period"

how can joint Anne Survivor life options be set up to provide?

it is set up to provide the Survivor would they specify percentage of payment both receiving . the smaller the survivors percentage, the larger the payment will be initially pay to the Joint payees.

explain the contingent beneficiary , what happens if there are no surviving beneficiaries at the time of the insureds death

it is the secondary beneficiary which is the next person or class of persons in line to receive the policy proceeds. Contingent beneficiaries receive the proceeds only at the primary beneficiary is removed or dies before the insured the next level below the secondary beneficiary is sometimes called a tertiary or third level beneficiary. if there are no surviving beneficiaries at the time of the insurance death proceeds are paid into the insurance of State. This is the reason people often named contingent beneficiaries

what is an accidental death benefit Rider? what is this rider also referred to as? how many days after an accident does death have to occur to be qualified? is there a limit of the age in which the insured policy owner can add this benefit? at what age does most of these Riders expire?

it provides an additional amount of insurance if the insured dies as a result of an accident. The additional amount is typically double or triple the amount of the base policies face value. These Riders maybe it refer to as Double Indemnity or triple identity Riders. and I still death benefit Rider pays its additional benefit only if death occurs because of an accident. Death resulting directly or indirectly from illness, physical disability, or self-inflicted wound generally does not qualify for the additional benefit. Also, the death must occur within a stated. Following the accident such as 60 or 90 days licensures live at the age at which the insured policy owner May at the accidental death benefit Rider ( such as age 50) after insured reaches age 65, most of these Riders expire. When the rider expires the premium charged for it also ends

a life insurance policies, disaster provision conforms the uniform simultaneous death at, which Most states have adopted. This act states that the absent proof to the contrary, the beneficiary is presumed dead before the insured if deaths occur nearly simultaneously from a common accident what does the law stipulate?

it stipulates a 120 hour (5days) survival period . in the car accident example oh, the wife's estate would receive the policy proceeds only if she survive at least a hundred twenty hours longer than the husband following that accident. If she dies within 120 hour period Carlos e proceeds would be paid to the contingent beneficiaries the insureds children.

an insurance policy will ____ if the premium due is not ____ by the end of the grace period . (Except for ____) fortunately, life insurance policies include a ____ that let's the policy owner place a lapsed policy back and forth if done within a specific _____ this period Is typically how many years? reinstatement is not possible policy has been surrendered and the cash value has been paid ____

lapse/ paid / UL / reinstatement provision/ period of time/ 3 years / out to the policy owners

under the life income with term certain settlement option the payee receives a what type of income payments? explain in detail

lifetime income payments but however payments are also guaranteed for a specified term. For example, a life income with 10 year. Certain provides payments to the payee for life. It also guarantees that those payments will be made for at least 10 years. So, if the pay died 6 years after payment begin, the payments will continue to a contingent payee for the remaining four years of the term. If the payee lives beyond the guarantee., payments will still continue to the payee until his or her death

how many people can the policy owner name as the beneficiary? if more than one beneficiary is named the proceeds are to be paid how? The policyowner can determine what? who is the decision entirely up to?

making a one-person as a sole beneficiary, or the policy owner can name joint beneficiaries or multiple beneficiaries to share the proceeds. they are to be paid jointly, and policy owner can determine how much each has to receive. Each may receive equal shares, or will not receive more than the other or others. The decision is entirely up to the policy owner. With an individual designation the only beneficiary (ies) is/are those individual specifically named

Miss dating the age or sex of the ensure I life shirts application is not considered a what? is there grounds for voiding the policy even If misstated? does the insurer have a right to adjust the benefits ? does it reflect death benefits ?

material misrepresentation. it is not grounds for boarding the policy even if the misstatement is discovered during the contestable period . on the other hand, if such a misstatement occurs, the insurer has the right to adjust a policies benefit this adjustment reflects a death benefit the insured would have bought with the premiums he or she paid, based on the insurance correct age or gender the insurer can adjust the benefits of her down depending on which way the age or gender was misstated

insurance policies include a free-look provision which gives what? when does it begin? what is the policy owner is not satisfied?

new policy owner a period Of time in which to review the policy and to decide whether to keep it. The free-look period Begins when the policy is delivered to the owner. At the policyowners not satisfied for any reason he or she can return the policy for a refund the premium paid. In this event the policy is voided from the beginning.

unlike other permanent policies does Universal Life contain the three standard nonforfeiture options? if so why , it not why ?

no it does not contain 3 standard nonforfeiture options . it is due largely because UL policies remain in force as long as their cash value allows the insurer to make a monthly deduction to cover the policies insurance and operational cost. Aul policy lapses when the cash value no longer covers its duction. And those situations a UL policy has very little or no cash value list. Nothing is left to apply the nonforfeiture option against. However, a UL policy owner always has the option of surrendering a policy for its full or (partial) cash value

what is the grace period For paying a life insurance premium in South Carolina? what does it mean ? what if they dont pay the premium within the grace period ?

no less than 31 days , the policy owner has 31 days following the premium due date to pay the premium. It's policy owner does not pay the premium within the 31-day grace period The policy may laps . The policy remains in force during the grace period So if the insured dies during the grace period, the death benefit is paid and unpaid premiums are deducted from the death benefit proceeds.

can the irrevocable beneficiary be removed?

only with his or her signed consent. The Only Exception is if he or she dies before the insured, in which case the policy owner can designate a new beneficiary, which may be revocable. Irrevocable beneficiaries are typically provided under court order.

policy Dividends are payable only with ____. state is one that participates in the insurers _____. participating policy Dividends are effectively a _____ as long as they do not see the total premiums paid by the policy owner at they are treated as a ____ premium .

participating life insurance policies/surplus/ return of unearned premium/ tax free return of

what does war exclusion exclusion life insurance ?

paying the death benefit if the death directly resulted from war, declared or Undeclared, or any Act of Hazzard of such a war

explain buy one year term insurance

policy dividends can also be used to purchase this term insurance the benefit purchase is based on the insurance attained age

when a death claim is filed, settlement must be made upon receipt of ____ when the insurer fails to pay the proceeds Within____ a submission of proof of Death and All necessary claim papers needed in order to pay the claim properly oh, the paper must include ____ of the insured until the date the claim is paid

proof of death / 30 days / interest at the legal rate of interest from the date of the death

insurance companies do not restrict a life insurance applicants ____ of a beneficiary. The policy owner can choose a natural person such as a _____ . Or, the beneficiary can any other legal person, such as_____ . _____ is not a factor When selecting the beneficiary

selection/spouse , a child or children / Corporation, partnership, or trust/ insurable interest

a life insurance policy death benefits can be paid out or ____ in many different ways at the death of the insured. these settlement options are specified in the policy. The policy owner can select the settlement option and _____ of the insured this becomes an irrevocable Choice which cannot be changed by the beneficiary. otherwise the policyowner killing the ______ still at the desired option. while the policy is in force, the policy owner may change the settlement options at any time. is there an option without a life contingency is one whose payment is not determined or affected by the life (or death) of the person receiving the income payment. What are the 4 settlement options?

settled/ upon death / beneficiary • lump sum cash payment • interest-only payment •payments for a fixed period • Payments of a fixed amount

policy Riders can also be used to provide life insurance coverage on more insureds under a ______ usually at a lower premium than if a second policy were purchased this is done by adding a term life Rider to the _______. Under these additional insured Riders, the insured is someone other than ____ insured under the base policy.

single policy/ permanent life policy/ primary

life insurance policies typically exclude certain risk from coverage. Summers may be excluded for a lifetime While others are excluded for ____ . any special risk which will specifically be excluded must be declared with a ____ a Peril that is excluded from coverage means that it is not covered policies benefit will not be ______.

specified time period / waiver agreement, at the time the policy is issued / paid if death results from that risk .

explained what happens under reduced paid up Insurance option. does this policy retain a cash value? And what about for the life of the policy? And what type of features does the new policy have? And what happens if the policy lapes?

the lapsed policy's cash value is applied as a single premium to buy a paid-up policy the same type as a lapsed policy, but with a reduced face amount . the paid-up death benefit is the amount that the cash value pass as a single premium of the insured's age. the reduced coverage will apply for the length of insurance life. a paid-up policy under the rpu option requires no further premiums. The paid-up policy does retain a cash value the cash value will continue to grow throughout the life of the policy. the new policy has all the features of the original policy. If the lapsed policy was a participating policy, the paid-up policy is eligible for dividends if and when the insurer declares them

what does the incontestability Clause state? material misrepresentations must be discovered within how many years? what If the insured has died ?

that after a policy has been in force for 2 years the insurer cannot contest a claim for any reason except for non-payment of Premiums. in other words, the policy becomes incontestable after it has been in effect for two years 2 year contestable., by the insured is alive or has died. They are not discovered, the insurer cannot later void the policy or contest the claim

what does the entire contract provision state?

that the insurance policy and the completed signed application to make up the entire contract. The application is normally attached and made a part of the policy. It also states that any other agreement or promise not contained in the contract is invalid. It confirms that all statements the policyowner makes and the application are representations, not warranties it also states that the producer cannot change the privacy and anyway, that an executive officer of the insurance company must document and sign all changes. Any such changes must be attached to the policy, at which point they become part of the contract

explain children's term Rider how much term life insurance does this Rider cover? what children will this cover? when does this coverage end? what happens when the coverage ends?

the amount of term life insurance covers at the Children's term insurance Rider provides is usually modest. This modest amount reflects the Generally smaller death benefit need when a child dies. coverage will apply to all the children of the family including stepchildren and legally adopted children. The premium does not change with addition of children, it is based on the average number of children people have. Coverage typically begins after a child is viable, generally one to two weeks after birth in coverage for any cover child normally is when he or she reaches a certain age, typically the age of majority, usually 18, 21, 25 coverage under the rider for other cover children who have not yet reached the limiting age stays in force. when coverage ins for any cover children, the truck and typically convert the covers too many permanent life insurance policy the insurer is then using without evidence of insurability. Option the policy amount can be up to some multiple of the term life insurance coverage , such as five times the term amount

explained the paid-up addition option give an example

the dividend buys additional paid up Insurance of the same type as the base policy. For instance, a $300 policy dividend on a whole life policy would be applied to buy an additional amount of paid up whole life insurance. ( the premium right for the paid-up additions it's based on the attained age of the insured when he or she by the addition) as each year's dividends are applied to buy these paid up additions, the age at which they are bought increases each year and because the age increases, the premium rates for the additional income Insurance increase each year.

explain the premium reduction option give an example

the insurance company uses the dividend to reduce the next premium due. Suppose, for example, by the annual premium was $1,000 and the declared dividend was $250. I'm such a case the policyowner choosing the premium reduction dividend option receives a premium notice for $750

what is a good example of a common disaster provision? what does the common disaster provision stipulate to help solve this example of a common disaster?

the insured ( husband) and the primary beneficiary (wife) are both killed in a car accident. This is the second marriage for both husband and wife, and both have children from their previous marriages. they have no children in common. the insurance children from his first marriage are the contingent beneficiaries I said the husband dies instantly oh, and the wife died several hours later in the hospital. If the wife were deemed to have survived the husband, even for a moment, then proceeds would be payable to estate oh, and her children might be the ultimate recipient of the policy proceeds the arrangement would probably violate the insureds intentions, since he has named his children as the contingent beneficiaries. The common disaster provision solves this dilemma. So the common disaster provision stipulates that the primary beneficiary always dies first in a common disaster as long as they do not survive the insured more than a minimum. Of time following a common accident, then proceeds are payable to the contingent beneficiaries

explain the accumulation option ( accumulate at interest) are they generally taxable?

the insurer holds the dividends in an interest-bearing account for the policy owner. Policyowner can withdrawal the accumulated dividends and interest at any time. Are Dividends are generally not taxable, the interest earned on dividends held at the interest is taxable income and the year credited. The holds true regardless of whether the policy owner withdrawals the interest earnings or allows the interest to continue to accumulate

what happens when the interest only option is selected? when is this option often used?

the insurer how the policy proceeds in an interest-bearing account until a future date sled by the beneficiary ( or policy owner) and pays out just the interest until then. The interest rate used with this option is the higher of a Guaranteed Rate specified in the policy or a current rate. The beneficiary has the option to withdraw some or all of the interest and/or Principle as needed. it's often used as a temporary option until the beneficiary can decide how to use or received insurance proceeds at the end of the interest paying period ( or upon request by the beneficiary) the proceeds that have been held by the insurer I paid out either in a lump sum or under one of the other settlement options

what happens under the nonforfeiture cash surrender option

the policy is surrendered and the insurer simply praise the cash value to the policy owner in a lump sum. At that point the policy is cancelled and the insured has responsibilities under the terms of the contract ends. Surrendered policies cannot be reinstated. Depending on the policy there may be a small surrender charge applied

explain the cash dividend option are they income taxable?

the policy owner simply elects to receive the dividend in cash. The insurance company sends a check for the amount of the declared dividend on the anniversary date of policy. Policy dividends receiving cash or not income taxable

what happens if more than one person is named a primary beneficiary?

the portion of the proceeds Egypt is to receive should be clear. For example a person may name his wife and two children as joint beneficiaries of his life insurance policy. The wife might be designated to receive one half of the proceeds of each child to receive 1/4. Though the amount they receive are different all three are considered primary beneficiaries.

explain waiver of cost of insurance (UL) what about for UL policies? is it identical to the provisions of the traditional waiver of premium Rider? Is it identical to the provision of the traditional waiver of premium Rider? is there any differences?

the traditional way for a premium Rider Works only when the policy premium is a fixed amount payable on a scheduled basis. For you out policies a disability waiver would generally only way through cost of insurance and expenses deducted from the policies cash each month which is why it is generally call the waiver of cost of insurance, although it is often called waiver monthly deductions. in any case, it only weighs the cost of the policy that month it is identical to the provision of traditional waiver of premium Rider except for the amount waived. The amount waived is the cost of the insurance deduction instead of the entire premium

the spendthrift clause also protects beneficiaries from whom? . It gets policyowners the right to stipulate what?

themselves the settlement option that will be used in distributing policy proceeds when I spendthrift Clause is in effect, the beneficiary cannot change the settlement option I said the beneficiary must abide by the settlement option the insured chose. for instance the owner may choose pay the life insurance proceeds to his "Prodigal Son" at the rate of $500 per month rather than in a lump sum

explain nonforfeiture options

these options prevent the loss of the cash value and apply when the policy is surrendered or lapsed. The policy owner is guaranteed access to the cash and a permanent policy. These values are guaranteed and cannot be forfeited ( a policy lapse occurs when the prophecies premium is not paid. A policy surrender occurs when the owner actively canceled the policy) . upon surrender or lapse the owner is entitled to the available cash or its equivalent in insurance. Life insurance policies, they contain three nonforfeiture options.

what are paid-up additions?

they are life insurance policies in their own right. As such their eligible for dividends and they each have a cash value that grows over time. Upon the insured's death, the total death benefit equals the face amount of the policy plus the face amount of the paid-up additions. Over time the cumulative effect of these expanding policy values can greatly enhance the policies total value, all for the same premium in the effect when the policy was issued. This option will be chosen by the insurer if the owner has neglected to choose one of the dividend options

are dividends guaranteed or not guaranteed? explain please, do Universal Life policies pay dividends?

they are not guaranteed. While insurers try to pay policy dividends consistently, they ( and their producers) but not under any circumstances state or imply but certainty that policy dividends will be paid. Universal Life policies do not pay dividends, but may credit interest at above the contrast right if appropriate

settlement options with a life contingency are based on what? And what are they also known as and what did they share in common?

they're based on lifespan of the payee. Also known as life income settlement options and a common element they share is that it involve income payments that the payee cannot outlive

explain lump sum or cash payment option

this is the most common settlement option and is how proceeds will be paid unless the owner of beneficiary chooses another option. a cash payment of policy proceeds is often referred to as a lump sum cash payment. Under this payment method, the beneficiary receives the death benefit proceeds in the form of a single payment. All proceeds are distributed at once upon the death of the insured. Proceeds paid to the beneficiary and a lump-sum are generally free of income taxes.

explain straight life income option explain the payment amount this option provides to rhe payees

this option is the Least Complicated of the life income settlement options. Under this option the policy proceeds are converted into an income stream that last the beneficiaries entire life. payment cease are the beneficiaries death straight life option provides the largest payment amount to the payee. That is because payment cease when the payee dies, no matter how soon that maybe after payments have begun. The absence of payment guarantees translates into a higher payment that would be the case if there were a payment guarantee. Since there is no guarantee of how much will eventually be paid out, beneficiaries who were concerned by this usually a like a life income option that includes some form of payout guarantee.

how do you qualify for Accelerated benefits? how do you get classified as terminally ill? what happens once your certified as terminally ill or critically injured?

to qualify for this benefit, the insured usually must prove that he or she either has a terminal illness or a catastrophic accident or illness that results in permanent disability requiring long-term care to be classified as terminally ill, the pricing must be certified by doctor as having a condition that can be expected to result in death typically within 24 months. what's certified, the insured may be permitted to choose whether he or she wants to receive the payout as a lump sum or in some cases may be paid out as monthly payments over a set time period

owners of traditional Whole Life policies can access their cash value only through what? And universal life insurance policies also allow withdrawals rather than what? how does the UL policies remain in force? what are withdrawals & what are they not?

traditional Whole Life policies that can access their cash values only through policy loans or full or partial policy surrenders. UL policies also allow withdrawals, rather than loans from their cash value. You have policy continues and force as long as the remaining cash value supports monthly deductions. they are not loans, nor do they in cure interest charges. Instead, a withdrawal reduces the universal life insurance policy's cash value and death benefit by the amount of the withdrawal. Unlike a policy loan the policyowner cannot repay a withdrawal

Under The Joint life options payments are made to how many individuals it only until how many deaths? explain the payments

two or more individuals but only until the first death payments will be larger van with a joint and Survivor payout since the chances are greater payments will end sooner with the term certain option payments are guaranteed to last for the certain. Regardless of when the first person dies

explain long-term care Rider what's some of the differences between LTC and accelerated benefits provision? how are benefits under LTC Rider similar to those of a long-term care insurance policy?

under this Rider it provides financial support for the cost of Medical Care, nursing home care, and assisted living care for extended durations. Like the accelerated benefits provision, the LTC Rider allows a portion of the Life policies face amount to be paid out should the insured require long-term care. The key difference between the two is that, unlike the accelerated benefits provision, LTC benefits does not require the insured to suffer a catastrophic injury to qualify for long-term care benefits. With LTC Rider, benefits become payable if the insurer requires long-term care for any reasons another difference between an accelerated benefits provision in long-term care Rider, LTC ridere typically come at a modest cost, whereas The Accelerated benefits provision is commonly included at no charge in Life policies today but for my money to pay for a range of medical and Social Service expenses and can be used for various levels of medical services, from nursing home care to Home Health Care. Some insurers offer additional options that provide funds for Adult Day Care, Hospice Care, and More

explain joint and Survivor life income option

under this option, monthly payments are made until the second payee (Survivor) dies. At that point incomex payments stop. The payment under this option will be smaller than with a single Life payout since the joint life expectancy over to life would be longer than that of a single individual.

explain extended term insurance option

under this option, the insure applies the cash value in the surrendered policy to buy a term insurance policy. The term insurance is bought in an amount equal to the face amount of the lapsed policy the term coverage lasts for whatever period The cash value buys

explain fixed period Option will the payee is mortality affect the amount the duration of payments?

under this settlement option, the death benefit is paid in equal installments every. Of time selected by the beneficiary or policy owner. Payments consist partly of death benefit proceeds and partly of interest earned on the undistributed funds remaining with the insurer. The amount of each payment is calculated so that the principal plus the interest earned reaches zero at the end of the selection. Payments can be made monthly, quarterly, semi-annually, or annually. the payee is mortality does not affect the amount or duration of the payment under this option. If the payee dies before the selection. Ends payment continue to a contingent beneficiary named by the beneficiary until the end of the.

when is a modal premium do? what happens if a policy owner fails to pay the premium on time?

when the premium is due on it's due date the grace. Begins on the due date.

all changes to life insurance contracts must be made in _____and an insurance company officer must endorse the change document before it becomes_____. producers ___ have the right to modify policy in any way. Modifications can only be made with the _____ of the owner in the insurer's ____

writing / effective / do NOT / mutual consent / executive officer

can Estates up be named as a beneficiary? if so how does this work?

yes it can and in this case policy proceeds are paid to the executor or administrator of the insurance estate at death. The main disadvantage to this type of designation is that it places the policy proceeds into the estate and will be subject to probate and subject to the claims of creditors and estate taxes this will also occur if there are no surviving beneficiary at the time of the insured's death. The insured's estate that always the default beneficiary if none are named or there are none surviving the insured

in a waiver of premium Rider, are premiums payable during the waiting period ? what's the age restriction ? what happens with the premiums after the age restriction?

yes they are payable, it's probably the owner still disabled at the end of the waiting period, the insurer refunds the premiums paid during the waiting. And weighs future premiums as long as a disability continues. Are there the insurer waves the premiums, they are in fact she'll paid by the insurer. This is important because in doing so the insurer make sure the policy cash value continues to grow in the policy remains financially stable. the maximum age restriction age is usually 65 or 70, if the policy owner becomes disabled before the maximum age, premiums are waived up to the maximum age ( two years if longer) this writer typically ends at the insured's age 65 at which time it will drop off the policy and no further premiums will be charged for the rider

do you reinstate a lapsed policy, the policy owner must provide what three things in a policy reinstatement? the original issue age is retained in the _____ a future premiums are based on that age. The purpose of reinstating a policy would be to do what?

• a written request for application for reinstatement • proof of insurability • payment of all that premiums plus interest reinstates policy keep the original younger & cheaper age

the manner in which policyowners may pay their policy premiums is outlined in the payment of Premium provision what does the provision Define?

• available modes of payment( the payment schedule) • grace period •automatic premium loan •whether the premium is level or flexible

contract modifications include

• beneficiary changes, if beneficiaries have not been named irrevocably • additional coverage • changes to the face amount (if the policy to provide for this) • change in the manner in which the policies death benefit is paid out • changes in mode of premium payment from month to quarterly or annually)

what can the primary beneficiary be?

• one person (a spouse) • multiple person (such as named children) •a class of people (example children of a marriage)

explain the two options that can be enabled in a life insurance policy

• policyowners can choose how they want the death proceeds paid out (settlement options) • how is the owners can choose how they want to apply any policy dividends they may receive (dividend options)

name the five options as how dividends can be received or used by the owner

• receive the dividend in cash • reduce the premium • accumulate at interest • buy one year term insurance • buy paid-up additions

what are the four Lifetime income options? in settlement options with a life contingency

• single (straight) life income • Life income with period certain •joint & survivor life income • joint life with term certain

what are the most common joint and Survivor options?

•joint and 100% Survivor in which the payment continues on reduced upon the first payees death • joint and 2/3 survivors, in which payments are reduced by 1/3 upon the first payees death (with two-thirds continuing to the Survivor) • joint and one-half Survivor, it which payments are reduced by one-half app on the first payees death

sometimes a policy owner wants to designate certain beneficiaries but also make arrangements in case one or more of those beneficiaries predecease the insured. This is possible through the use of what two beneficiary designations?

•per capita (per head ) •per stirpes (per branch)

following standard policy exclusions are found in most policies. They are excluded for the life of the policy, even after contestability period ins. These steroid explosions are not required by State insurance regulations but are permitted to...

•war exclusion • Aviation exclusion • hazardous hobbies and occupations • suicide provision