Life and Health Exam

Payor Benefit Rider

Primarily used with juvenile policies; otherwise; it functions like the waiver of premium rider. If the payer becomes disabled for at least six months or dies, the insurer will waive the premium until the minor reaches a certain age, such as 21.

Living Needs Rider

Provides for the payment of part of the policy death benefit if the insured is diagnosed with a terminal illness that will result in death within 2 years. Used to provide the insured with the necessary funds to take care of necessary medical nursing home expenses that occur as a result of the terminal illness.

Policy Riders

Raiders are written modifications attached to a policy that provide benefits not found in the original policy. Riders sometimes require an additional premium. But help taylor policy to the specific needs of the insured.

Entire Contract Provision

Stipulates that the policy and a copy of the application, along with any rider or amendments, constitute the entire contract

Assignments

The assignments provision specifies the policy owners right to assign the policy. The policy owner must advise the insure in writing of the assignment.

Cash option

The policy owner simply surrenders the policy for the current cash value at a time, and coverage is no longer needed or affordable

Revocable designation

The policyowner, without the consent or knowledge of the beneficiary, may change a revocable designation at any time.

Disability Riders: Waiver of Premium

Waives premium for the policy if the insured becomes totally disabled. Coverage remains in force until the insured is able to return to work. If the insured is never able to return to work, the premiums will continue to be waived by the insurance company most companies impose a six month waiting period for the time of disability until the first premium is waived. This writer usually expires with the insured reach his age 65.

Misstatement of Age and Gender

a provision which allows the insurer to adjust the policy at any time due to a misstatement of age or gender is included in the policy

Cost of Living Rider

addresses the inflation factor by automatically increasing the amount of insurance without evidence of insurability from the insured. The face value of the policy may be increased by a cost of living factor tied to an inflation index, such as the consumer price index (CPI)

Term Riders

allow for an additional amount of temporary insurance to be provided on the insured without the need to issue another policy. they are usually attached to a whole life policy to provide greater protection at a reduced cost.

Reinstatement

allows for a lapsed policy to be put back in force. the maximum time limit is usually 3 years after the policy has lapsed. the policyowner must provide proof of insuribilty. the policyowner is required to pay back all premiums plus interest and may be required to pay back any outstanding loans plus interest.

Status Clause Exclusion

excludes all causes of death while the insured is on active duty in the military

Disability Income Rider

in the event of disability the insurer will waive the policy premiums and pay a monthly income to the insured

Common Disaster Clause

-If insured and primary die in same incident, assumed that primary died first. -Intent is to fulfill the wishes of the policy holder. -Usually if primary dies 14 - 30 days after policy holder (when in same incident) the $ goes to the contingent or the insureds estate

Flexible Premium

A policy feature that allows the policyholder to increase or decrease the premium during the policy period

Children's Term Rider

Allows children of the insured to be added to coverage for a limited period of time for a specified amount. This coverage is Turman, Sherance, and usually expires with a minor reaches a certain age (18 or 21). One premium for all children.

Accelerated Living Benefit Rider

Allows the early payment of a portion of the death benefit if the insured has any of the following: - terminal illness - A medical condition that requires an extraordinary medical intervention for the insured to survive - A medical condition that without extensive treatment drastically limits the insurance life - In ability to perform activities of daily living in parentheses (ADLs) - Permanent institutionalization or confinement to a long-term care facility - Any other conditions approved by the department of insurance?

Guaranteed Insurability Rider

Allows the insured to purchase additional coverage at specific future dates, without the evidence of insurability, the new premiums will be calculated only on the person's attained age.

Nonforfeiture Options

Because permanent life insurance policies have cash values, certain guarantees are built into the policy that cannot be forfeited by the policyowner. These guarantees (known as nonforfeiture values) are required by state law to be included in the policy. A table showing the nonforfeiture values for a minimum period of 20 years must be included in the policy. The policyowner chooses one of the following nonforfeiture options: cash surrender value, reduced paid-up insurance, or extended term.

Hazardous Occupation or Hobby exclusion

If the insured dies as a result of a hazardous occupation or hobby, the insurer will not pay the claim.

Policy Loan Option

Is found only in policies that contain cash value. The policyowner is entitled to borrow an amount equal to the available cash value. Any outstanding loans, and accrued interest, will be deducted from the policy proceeds upon the insured's death. The insurer must provide 30 days written notice to the policyowner that the policy is going to lapse. An insurance company may defer a policy loan for up to 6 months.

War or Military Service Exclusion

Most life insurance policies issued today do not exclude military service.

Aviation Exclusion

Most life insurance will cover an insured as a fare-paying passenger or a pilot on a regularly scheduled airline, but will exclude coverage for noncommercial pilots, or require an additional premium for the coverage.

Owners Rights

Only the policyowner has the ownership rights under the policy, and not the insured or the beneficiary.

Waiver of monthly deductions rider

Pays all monthly deductions while the insured is disabled, after a 6-month waiting period. This writer only pays the monthly deductions and not the full premium necessary to accumulate cash values. This writer is usually found in universal life and variable universal life policies.

Grace Period

Period of time after the premium due date that the policyowner has to pay before the policy lapses

Policy Options

Policyowners have decisions to make about (1) How the cash value in the policy should be protected (2) How the return of excess premium (dividends) should be invested,(3) How benefit payments will be made.

Collateral Assignment

involves a transfer of partial rights to another person. It is usually done in order to secure a loan or some other transaction. A collateral assignment is a partial and temporary assignment of some of the policy rights. Once the debt or loan is repaid, the assigned rights are returned to the policyowner.

Absolute Assignment

involves transferring all rights of ownership to another person or entity. permanent and transfer of all the policy rights.

Return of Premium Rider

is implemented by using increasing term insurance. when added to a whole life policy, it provides that a death prior to a given age, not only is the original face amount payable, but an amount equal to all the premiums paid is also payable to the beneficiary. this rider usually expires at a specified age such as age 60.

Automatic Premium Loan Provision

is not required, but is commonly added to contracts with a cash value at no additional charge. This is a special type of loan that prevents the unintentional lapse of a policy due to nonpayment of the premium.

Irrevocable Designation

may not be changed without the written consent of the beneficiary

Results Clause Exclusion

only excludes the death benefit if the insured is killed as a result of an act of war (declared or undeclared)

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

Other Insured Rider (Family Rider)

provides coverage for one or more family members other than the insured. The writer is usually level term insurance attached to the base policy, covering the insured also known as a family rider. If the writer covers just the spouse of the insured, it can be specified as a spouse term rider

Insuring Clause

sets forth the basic agreement between the insurer and the insured. It states the insurers promise to pay the death benefit upon the insureds death

the uniform simultaneous death law

stipulates that if both the insured and beneficiary die in a common accident with no way to determine who died first, it will be automatically assumed that the insured outlived the beneficiary and proceeds will be paid to the contingent beneficiary or the insured's estate

Extended Term Option

the insurer uses the policy cash value to convert to term insurance for the same face amount as the former policy. the duration of the new term coverage lasts for as long a period as the amount of cash value will purchase. if the policyowner has neglected to purchase one of these non-forfeiture options, the insurer will automatically implement the extended term option in the event of termination of the original policy.

Premium Mode

the manner or frequency that the policyowner pays the policy premium

Reduced Paid-Up Insurance Option

the policy cash value is used by the insurer as a single premium to purchase a completely paid-up permanent policy that has a reduced face amount from that of the former policy

Level Premium

the premium that does not change throughout the life of a policy

Free Look

this provision allows the policyowner 10 days from receipt to look over the policy and if dissatisfied for any reason return it for a full refund of premium

Exclusions

types of risks the policy will not cover