Life policy provisions, options and riders
lump-sum payment
If a settlement option is not chosen by the policyowner or the beneficiary, what option will be used by the insurer?
The longer the period selected, the smaller each installment will be
In the fixed-period settlement option, how will the number of installments for the death benefit proceeds determine the amount of the installments?
Contingent Beneficiary
Who does the common disaster clause protect?
Cash Surrender
Under which nonforfeiture option does the company pay the surrender value and have no further obligations to the policyowner?
Return of unused premiums
What are policy dividends?
Cash, reduced premium, accumulation at interest, paid-up additions, paid-up option, one-year term, and acceleration of endowment
What are the dividend options in life insurance policies?
Cash surrender, reduced paid up, and extended term
What are the three nonforfeiture options in life insurance policies?
Paid-Up Additions
What dividend option can increase the death benefit of the existing life policy?
The insurer will pay a benefit of twice the face amount
What does the term 'double indemnity' mean?
The cash value is converted to the same face amount as in the whole life policy
What happens to a policy's cash value under an extended term nonforfeiture option?
Policy premium in a reinstated policy will be set according to the insured's original age.
What is the advantage of reinstating a life insurance policy as opposed to applying for a new one?
Other Insured Rider
What is the name for a life insurance policy rider that provides coverage on the insured's family members?
To prevent the unintentional lapse of a policy because of no payment of the premium
What is the purpose of an automatic premium loan provision
To determine how the death benefit will be paid to the beneficiary
What is the purpose of settlement options in life insurance policies?
Incontestability
What life insurance policy provision prevents an insurer from disputing or denying a claim due to misstatements on the application after a certain period of time?
Waiver of Premium
What life policy rider allows the company to forgo collecting the premium if the insured becomes disabled?
Reinstatement
What provision allows the policy owner to reactivate a lapsed life insurance policy within a specific period of time with proof of insurability
Lump-sum/cash, fixed period, fixed amount, life income, interest only
What settlement options are available in life insurance policies?
Settlement options
What term is used to describe methods of payment of the death benefit to the beneficiary upon the insured's death?
Collateral Assignment
What type of assignment is used to secure the payment of a debt with an existing life insurance policy?
revocable
What type of beneficiary can be changed at any point by the policyowner?
Extended Term
Which nonforfeiture option is automatically selected by the company if not chosen by the policy owner?
Reduced Paid-Up
Which nonforfeiture option provides coverage for the longest period of time?
Absolute Assignment
Which of the two types of policy assignments requires transfer of all ownership rights in the policy to a third party?
Policy owner
Who controls changes in premium payments, face values, and loans in a life insurance policy?
Policy proceeds are retained by the insurance company; only the interest is paid to the beneficiary
With the interest only settlement option, what happens to the policy's death benefit?
The dividend is applied to the next year's premium (it reduces the next year's premium)
With the reduction of premium dividend option, how is the dividend used?