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