Life Insurance Policy Provisions, Options, and Riders .1
A provision that allows a policy owner to temporarily give up ownership rights to secure a loan is called?
Collateral Assignment
What parts make up an insurance contract?
Declaration Page, Insuring Agreement, Exclusions, Conditions
signing over your entire policy to another person or entity.
Absolute assignment
Which of these is considered to be a living benefit option in a life insurance policy?
Accelerated death benefit
a provision in most life insurance policies that allows a person to receive a portion of their life insurance money early — to use while they are still living.
Accelerated death benefit
This is not a common exclusion to a life insurance policy
Accidental Death
dividend option allows the policy owner to leave dividends with the insurer to accumulate interest. In turn, the policy owner will be required to pay taxes on any interest (profit) generated by the dividend.
Accumulate interest option
An error was made on Mary's life insurance application. Which piece of information that could've been an error, would the "incontestable clause" not apply?
Age (The incontestable clause does not apply to the "misstatement of age" provision)
allows the insurance company to deduct the overdue premium from an insured's cash value by the end of the grace period if a payment is missed on a life policy
Automatic Premium Loan Provision (or rider)
A life insurance policy owner was injured in an automobile accident which results in a total and permanent disability. Which rider would pay a monthly amount because of this disability?
Disability income rider
a yearly payment granted to an insurance policyholder, often of a permanent life insurance or long-term disability policy. The amount depends on factors such as profits made by the insurance company, investment performance, and the amount of money paid into the policy.
Dividends
a condition which limits the insurance companies liability to provide coverage
Exclusion
states that the insurance contract will be executed when both parties (the insurer and the policy owner) have satisfied the conditions of the contract. In other words, when both parties have fulfilled their responsibilities, the contract will be executed.
Execution Clause
nonforfeiture option permits the policy owner to use the policy's cash value to buy level, extended term insurance for a specified period. No further premium payments are made.
Extended Term Option
The provision that allows the policy owner right to return the policy for a full refund within a specified number of days.
Free look provision
is a period after the due date of a premium during which the policy remains in force without penalty.
Grace Period
The _____ permits the policy owner to buy additional permanent life insurance coverage at predetermined intervals without submitting proof of insurability
Guaranteed Insurability Rider
Allows for the insured to purchase additional insurance at specific dates or events without proof of insurability
Guaranteed insurability rider
an income product that provides you with fixed monthly income that is guaranteed for life, no matter how the markets perform.
Income Annuity
states that the insurance company may not challenge the validity of the policy once the policy has been in force for a period of time, typically two years
Incontestable provision
the insurer's basic promise to pay specified benefits to a designated person in the event of a covered loss.
Insuring Clause
What is not a common life insurance non forfeiture option?
Life income annuity
standalone investment products that supplement your retirement income. You pay premiums or a lump sum to fund the?
Life insurance annuities
A guaranteed issue insurance policy has no?
Medical underwriting
states that any changes made to the contract must be in writing and endorsed or attached to the policy. It also states that only an officer of the insurer or authorized home office personnel possess the authority to make any changes or modifications or waive a policy provision
Modification Provision
options are the options you have for your cash value if you terminate a policy that has a cash value. You are closing your account (surrendering your policy); what do you want us to do with your cash (so you don't forfeit it)?
Non forfeiture options
dividend option allows the policy owner to exchange the dividend for additional coverage in the form of a one-year term policy.
One year term option
What is an insurer required to do when faced with an error made under the "Misstatement of age" provision?
Pay corrected benefits
entitles a company, at its own expense, to make physical examinations of the insured at reasonable intervals during the period of a claim, unless it's forbidden by state law.
Physical Exam and Autopsy
outlines the conditions under which the company will allow the policy owner to change the policy's coverage. If the premium is increasing, but the face value remains the same, the insured would not have to prove insurability.
Privilege of Change Clause (Policy Change Provisions)
Which is a reinstatement condition?
Proof of insurability
nonforfeiture option allows the policy owner to reduce the policy's benefit amount and, in turn, cease making premium payments.
Reduced Paid up option
dividend option allows the policy owner to return the dividend payment to the insurer in exchange for a reduction in the following year's premium payments.
Reduced premiums option
In order to activate the reinstatement clause of a lapsed life insurance policy, the insured MUST:
Resubmit a new life insurance application
rider that pays the total amount of premiums paid into the policy in addition to the face value, as long as the insured dies within a specific period specified in the policy. It may also return premiums to the insured at the end of a specified period.
Return of premium rider
A life insurance policy owner does not have the right to?
Revoke an absolute assignment
were created to give insureds an inexpensive option to add additional temporary coverage to a permanent policy. These allow for an additional death benefit (above the permanent face value) if the insured dies during a specified term.
Term Insurance Riders
Which dividend option would an insurer invest the policy owner's money and add any interest earnings as the dividends accrue?
The accumulation of interest option
states a policy owner must pay a premium in exchange for the insurer's promise to pay benefits.
The consideration clause
rider allows the policy owner to waive premium payments during a disability and keeps the policy in force
Waiver of premium rider
What are common exclusions to a life insurance policy?
War, aviation, hazardous occupation, hobbies, felonious activities, suicide
insurance provides death benefits for the entire life of the insured. It also provides living benefits in the form of cash values. It matures at age 100 and normally has a level premium.
Whole Life Policy
a provision in a Life Insurance policy that can provide an additional payment if your death occurs as the result of an accident, often double the amount of money.
a double indemnity rider
a provision included in certain life insurance policies stipulating that the policyholder will not forfeit the value of the policy if the policy lapses after a defined period due to missed premium payments
a non-forfeiture option
A provision that allows a policy owner to withdraw a policy's cash value interest fee, is called?
a partial surrender
What is an alternative option to a life settlement?
an accelerated death benefit rider
The "______" dividend option allows the policy owner to cash out the dividends they receive.
Cash Option
What are 3 common life insurance non forfeiture options?
Cash surrender, extended term insurance, reduced paid up insurance
This allows an insurer to conduct business in a state
Certificate of Authority
Which of the following protects a policy owner from a misrepresentation caused by an innocent mistake?
The incontestable clause
What does the insuring clause state?
The insurer's obligation to pay a death benefit upon an approved death claim
The two MAJOR actions required for a policyholder to comply with the Reinstatement clause are?
provide evidence of insurability, pay past due premiums
By doing this, the policy owner uses the policy's cash value as the premium for a single-premium whole life policy at a lesser face amount than the original policy
reduced paid up non forfeiture option