Life Policy Provisons Options and Riders

What are the settlement options for life insurnce also known as CLIFF?

-Cash -Life Income -Interest Only -Fixed Period -Fixed Amount

What will happen if somone lies about there age or gender, and tobacco use?

-Coverage will be adjusted -Non-tobacco use discount will be removed if the lie is about using tobacco

The owners right in a policy are found in the ownership clause and include what?

-Determining the disposition of proceeds (settlement options) -Assignment of the policy and benefits -Rights to the policy's cash value -Choosing the premium payment mode -Choosing or changing the beneficiary -Canceling and renewing the policy -Deciding how dividends will be used

What is the least expensive mode and what is the most expensive?

-Least=Annual -Most=Monthly

A minor as a beneficiary is not wise because why?

-Minors are not legally competent to recieve policy proceeds

What are the common options in cash value policies?

-Reduced Paid-Up -Extended Term Insurance or Cash Surrender

What are the life income options?

-Straight or pure life with no refund -Life with refund -Life with period certain -Joint survivor life income pays one check to two people and the survivor continues to receive a payment until death

The irrevocable beneficiary has a what and may continue to do what?

-Vested right in the Face Value only -Continue to make the premium payments to keep the policy in force if it lapses, and is entitled to a copy of the policy. -The irrevocable beneficiary has no ownership rights in the contract

Per capita is what and per stirpes is what?

-per head or per person -Is latin for the root

WA Law states that life insurance replacement policies have a how many day free look period?

20 day

Reinstatement allows what?

A canceled policy to be put back in force

What does class designate?

A group rather than an individual name

What is the cash option?

A lump sum is paid to a beneficiary

Named party specifies what?

A person by name to receive the death proceeds when the isured dies

The provision contains what?

A short-term survivorship clause which states that if the insured and primary beneficiary die due to the same accident but the primary beneficiary dies within a certain number of days after the insured (10, 20 or 30 days and is stated in the life insurance policy), then the contingent beneficiary will receive the proceeds just as if the primary beneficiary had died first

What kind of assingment is a collateral assignment?

A temporary and partial assignment

What is the exception to owning a policy?

A third party owner such as buisness insurance or a juvenile policy

Automatic Premium Loan is used on what?

A whole life policy at no additional charge, and authorizes the insurer to borrow policy cash value to pay premium to keep the policy in-force

What does modes =?

Annual, semi-annual, quarterlym monthly, pre-authorized checking

What happens if there is no beneficiary?

Anu death proceeds paid would go to the insured's estate

This option goes into effect how?

Automatically if no other option is chosen by the policy owner

Reinstatement is not what?

Available if the policy has been surrendered for its cash value

A revocable beneficiary may what?

Be changed at any time by the policy owner, in writing, to the insurance company

What is fixed amount option?

Beneficiary receives payment of a predetermined amount consiting of both principal and interest

Insured attained age is ued to do what?

Calculate the premium each year

A permanent policy must have what?

Cash valued by the end of its third year

Insurers have the option to do what?

Charge interest on the past due premiums when paid, but most do not

The content and effect of the common provisions are what?

Constant in the industry and some are actual state laws

The suicide clause excludes what?

Death due to the suicide for a max of two years from the effective date of the coverage

If the owner does not choose an option, the beneficiary has the right to do what?

Decide how to receive the proceeds

Producers what?

Do not have authority to change the policy or waive policy provisions

No changes are valid unless what?

Endorsed by an executive officer of the insurance company.

The primary beneficiary is what?

First in line to receive the death proceeds when the insured dies

What is the settlment options provision?

Give the right to elect or change options rests with the policy owner -Owner may choose any option under which proceeds will be distributed to the beneficiary, regardless of the beneficiary's wishes

What is an absolute assingment used for?

Giving life insurance a gift so that a tax deduction, in the amount of the cash value, may be taken by the owner

This saves doing what?

Having to change beneficiary designations if someone in the group dies or because of additions due to birth

Premium payment does what?

Identifies the fact that the policy owner must pay premiums as value to the insurance company for the insurer's promise to pay

It states what?

If the insured dies during the grace period (usually 31 days from the premium due date), death proceeds are paid to the beneficiary, minus the past due premium

Nonpayment of policy loans results in what?

In the insurance company either deducting the loan plust interest from cash value upoon surrender, or if the insured dies, the loan plus interst will be subtracted from the proceeds paid to the beneficiary

A nonforfeiture provison must be what?

Included in the policy under the standard nonforfeiture law which prescribes that a policy's cash values must be made available to a policy owner should he stop paying the premiums on his policies

What is a spendthrift?

Is a person who spends money extravagantly

What is the max amount which can be borrowed from a permanent life policy?

Is the amount of the cash value

Lying about using tabacco products, age, or gender is not considered what?

Material

If there is a misrepresentation or a concealment discovered in the first 2 years, it must be what to do what?

Material for the insurer to deny coverage or to cancel the policy

What is a spendthrift clause?

May be included as a rider, and it exempts the beneficiares and creditors from recieving the polic proceeds other than how it was inteded by the owner of the policy

What is a irrecovable beneficiary?

May only be changed with written consent from the irrevocable beneficiary and the policy owner

An estate, trust or company may be what?

Named as a beneficiary to recieve the policy proceeds

Reinstatement starts what?

New incontestability and suicide clauses

Is listing a beneficiary required?

No

Since a beneficiary has no owernship rights in the life insurance contract, a beneficary signature is what?

Not needed on the application for insurance

The contingent beneficiary is what?

Only gets the death benefit if the primary beneficiary dies before the insured or at the same time as the insured dies

What is a temporary and partial assingment?

Only some of the "incidents of ownership" are transferred

All premiums must be what?

Paid (no interst) must be refunded to the beneficiary if the insured commits suicide within the first two years of the contract

A collateral assignemnt transfers what?

Part of the rights to supply security (collateral) for a loan

Do reinstate policy the owner must what?

Pay all back premiums plus interest and insured must show proof of insurability

Classes of persons may be listed as what?

Per capita or per stirpes

What kind of assingment is an absolute assignment?

Permanent and complete assingment where all incidents of ownership are transferred

The suicide clause is intended to do what?

Prevent adverse selection

If the insured and primary beneficiary die in the same accident and there is no evidence that the primary benficiary outlived the insured, what happens?

Proceeds will go to the contingent beneficiary

What is the basic purpose of this provision is to what?

Provide assurance to the policy owner that he has all necessary documents with regard to his insurance coverage

Net premium is used to do what?

Purchase term coverage on a non-medical basis

The policy owner will what?

Receive a policy that is paid in full for life

All premiums must be what?

Refunded within 30 days or the insurance company must pay an additonal 10% penalty to the owner should the policy be returned

A policy surrendered for its cash value cannot be what?

Reinstated

If the policy is reinstated, it is usally what?

Reinstated back to the age of the insured when the policy was issued

The insurance company must do what if a claim is denied or a policy is canceled during the first two years of the contract?

Return all of the premiums (no interest) paid

What are common standard provisions?

Some provisions found in almost all life linsurance policies

The owner may still choose what with a irrevocable beneficiary?

Still choose dividends options, including the cash option, and ay still change his premium payment mode

A "last will and testament" does not what?

Supersede an insurance contract

What does the incontestability clause state?

That after a policy has been in force for over two years, the insurance company cannot contest or void the policy except for fraud committed by the insured or nonpayment of premium -The first years of the contract are contestable

What does the common disaster provision state?

That as long as the beneficiary dies within a certain period of time following the death insured, it will still be treated as if the beneficiary dies first

Misstatement of Age or Gender (Sex) provision states what?

That if the age or sex of the insured is found to have been misstated, the amount of insurance will be adjusted to the amount which would been purchased by the premium had the correct age or sex been known

What does the entire contract provision state?

That the contract is made up of the policy itself, the attached application, and any riders or endorsements

When the company designs its policies it expects what?

The annual premium up-front

What is fixed period option?

The beneficary receives equal payments of both principal and interest over a designated period

What is reduced paid up insurance?

The cash value is used as a single (NET) premium to buy a paid up coverage on a non-medical basis

If money is withdrawn from the company in the form of a loan, it is no longer availble for investment, therefore?

The company must charge interest on the funds it loans in order to meet its obligations

The insuring agreement clause is on what?

The face or front page of the life policy

The more often premium payments are made, the what?

The higher the cost to the inusred

What is interest only option?

The insurance company holds the proceeds and pays the interest earned to the beneficiary where the interest is taxable

This provision represents what?

The insurance company's promise to pay

The owner of the insurance contract is usually what?

The insured

What does the premium payment also states?

The mode and amount of the premium payment

Cash surrender allows what?

The owner the option to surrender the policy at any time in return for its cash value

What is in the loan provision?

The owners of policies that build cash value may make use of the equity in their policies without cashing them in -Do this trhough a policy loan

The grace period is what?

The period of time that there is still coverage even if premiums have not been paid

What does free look regulation give?

The policy owner a minimum of 10 days to examine the policy from the date it is received by the policy owner

The insuring agreement tells what?

The policy owner that the insurer agrees to pay the death benefit to the beneficary upon the due proof of death of the insured

What happens in assingment?

The policy owner transfers the rights in a policy to another

What is extended term insurance?

The policy owner uses cash value (minus any loan amounts) as premiums to purchase term insurance in the original face amount for as long as the cash value lasts

The face or front page of an insurance contract expresses what?

The promise of the insurer and lists the name of the company, insured, amount of insured carried, and mode and amount of premium and the effective date of coverage

Policy provisions state what?

The rights and obligations of both the policy owner and the insurance company under the insurance contract

This clause does not have what?

The two-year contestability limit for discovery

APL prorvision prevents what?

The unintentional lapse of a policy due to nonpayment of premium and the loan plus interest must be paid back

No assignment, loans or withdrawls are allowed without what?

The written consent of the irrevocable beneficiary

What is conformity with state statutes?

This policy is subject to the laws of the state where the insured resides -If any part of the policy does not comply with the law, and it will be treated by us as if it did

No more then how many years have passed from a lapsed date for a policy to be reinstated?

Three years

What is an absolute assingment?

Transfers all of the rights to another

The insurance company has to pay the cash to the owner when?

Up to six months also know as the delay clause

Should the loan plust interest meet or exceed the cash value, the policy will what?

Will terminate following a grace period