Primerica Chapter 4

Children's Term Rider

Allows children of the insured to be added to coverage for a limited period of time for a specified amount.

Misstatement of Age and Gender

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

standard policy provisions

1. ownership 2. assignment 3. payment of premium 4. right to examine 5. grace period 6. reinstatement 7. inconstestability 8. misstatement of age or gender 9. payment of claims 10. exclusions

Cost of Living

addresses the inflation factor by automatically increasing the amount of the insurance without evidence of insurability

Right to Examine

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

Disability Income Benefit

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

Family Term Rider

incorporates the spouse term rider along with the children's term rider in a single rider

Extended Term

insurer uses the policy cash value to convert to term insurance for the same face amount as the former permanent policy

Collateral Assignment

involves a transfer of partial rights to another person

Guaranteed Insurability Rider

Allows insured to purchase additional amounts of disability income insurance at future dates

NAIC

National Association of Insurance Commissioners

Grace period

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

Entire Contract

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

Payment of premiums

Stipulates when premium payments are due, how and to whom they must be paid

Common Disaster Clause

When insured and primary die at the same time, it is assumed that the primary died first

contingent beneficiary

a beneficiary who has second claim to the policy proceeds after the death of the insured (usually after death of the primary beneficiary)

Primary Beneficiary

a beneficiary who has the first claim to the policy proceeds after the death of insured.

Payment of Claims

death benefits are paid to the beneficiary, if no beneficiary the proceeds are paid to the estate

Automatic Premium Loan

not required, but 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 non payment of the premium

Long Term Care

often purchased as a separate policy, can also be marketed as a rider to life insurance policy

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

Payor Benefit

primarily used with juvenile policies, functions like the waiver of premium rider

Assignment

transfer of rights of policy ownership

Exclusions

types of risks the policy will not cover

Absolute Assignment

involves transferring all rights of ownership to another person or entity

Reduced Paid-Up Insurance

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

Spendthrift Clause

protects beneficiaries from the claims of their creditors

Return of Premium

implemented by using increasing term insurance

Waver of Premium

waives the premium for the policy if the insured becomes totally disabled

accidental death rider

pays some multiple of the face amount if death is the result of an accident as defined in the policy

Accelerated Benefits

provides an early 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

Other Insured Rider

provides coverage for one or more family members other than the insured

Principal Amount

the face value of the policy; the original amount invested before the earnings