Module 5 (part 1)_Life Insurance Policy Provisions, Options, and Riders

What is a death benefit?

Amount paid to beneficiary upon death of insured.

What is a face amount?

Amount of coverage provided by policy.

What is a premium?

Amount paid by policy owner to insurer for coverage.

What is an annuity?

A contract that provides a series of payments at regular intervals.

What is a dependent rider?

Adds dependents as additional insureds

What is Guaranteed Insurability Rider?

Allows buying additional coverage without proof of insurability.

What is an accelerated benefits rider?

Allows insured to receive portion of death benefit before death if terminally ill.

What is Cash Option?

Allows policy owner to cash out dividends

What is Cash Surrender Option?

Allows policy owner to receive cash value

What is the assignment clause?

Allows transfer of policy rights to another person/entity.

What is contained in the Consideration Clause?

Amount and frequency of premium payments

What is a cash value?

Amount available to policy owner upon policy cancellation.

What is an absolute assignment?

Assignee receives full control over policy.

What is Collateral Assignment?

Assignment of policy to creditor as security for debt

What does the Incontestable Clause apply to?

Cases of fraud.

What does a policy owner's consideration consist of?

Completing application and paying initial premium

What is Automatic Premium Loan Provision?

Deducts overdue premium from cash value

What is the benefit allowed under Guaranteed Insurability Rider?

Every three years, up to the original face amount of the policy.

What are exclusions?

Features stating policy won't cover certain risks

What is Incontestable Provision?

Insurance company cannot challenge policy validity after a period of time.

What is the accumulate interest option?

Leaves dividends with insurer to accumulate interest.

What are the specific events covered under Guaranteed Insurability Rider?

Marriage and births.

What are dividend options?

Options for receiving dividend payments

What happens to the proceeds above the amount due at the insured's time of death in Collateral Assignment?

Paid to beneficiary designated by policy owner

What is an accidental death benefit rider?

Pays additional sum if insured dies due to covered accident.

What is a multiple indemnity rider?

Pays multiple of policy face amount if insured dies due to covered accident.

What is the grace period?

Period after premium due date during which policy remains in force

What is the free look period?

Permitted days to review policy and return for refund

What is a policy owner?

Person who owns the insurance policy.

What is a beneficiary?

Person who receives policy benefits upon death of insured.

What happens if the policy owner doesn't resume payments after Automatic Premium Loan?

Policy lapses

What is Consideration Clause?

Policy owner must pay premium in exchange for insurer's promise to pay benefits

What is the entire contract provision?

Policy, riders, endorsements, and application comprise entire contract

What is a dividend?

Portion of insurer's profits paid to policy owner.

What is the maximum time a life insurance company may legally defer paying the cash value of a surrendered policy?

Six months

What is the purpose of Incontestable Provision?

To protect policyholders from insurance company disputes.

What is the typical period for Incontestable Provision?

Two years.

What is the extended term option?

Uses cash value to buy level, extended term insurance