UNIT 7 - LIFE INSURANCE POLICY PROVISIONS

REVOCABLE BENEFICIARY

A BENEIFICIARY DESIGNATION THAT CAN BE CHANGED WITHOUT NOTICE AND WITHOUT THE BENEFICIARY'S KNOWLEDGE OR CONSENT.

BENEFICIARY - MINOR

A PERSON UNDER THE AGE OF 18; SUCH PERSON(S) ARE DEEMED LEGALLY INCOMPETENT AND THEREFORE THEY CANNOT TAKE OWNERSHIP OF LIFE INSURANCE PROCEEDS.

ENDORSEMENTS

ANY CHANGE MADE TO THE CONTRACT MUST BE MADE IN WRITING AND AGREED TO BY BOTH THE INSURER AND THE POLICYOWNER; THIS AMMENDMENT MUST BE SIGNED BY AN EXECUTIVE OFFICER OF THE COMPANY AND CANNOT BE AUTHORIZED BY AN AGENT/PRODUCER.

SUICIDE EXCLUSION

DEATH BY SUICED IS NOT COVERED FOR A CERTAIN PERIOD OF TIME AFTER THE POLICY GOES INTO EFFECT.

MISSTATEMENT OF AGE

IF THIS OCCURS, THE FACE AMOUNT OF THE POLICY WILL BE ADJUSTED TO AN AMOUNT THE PREMIUM WOULD HAVE PURCHASED AT THE INSURED'S CORRECT AGE.

PER STIRPES DISTRIBUTION

MEANS "BY THE BRANCH" AND IT SIGNIFIES THAT THE CHILDREN OF A DECEASED CLASS BENEFICIARY ARE ENTITLED TO THAT BENEFICIARY'S SHARE OF THE PROCEEDS.

PER CAPITA DISTRIBUTION

MEANS "BY THE HEAD" AND DIVIDES THE POLICY'S DEATH BENEFIT EQUALLY AMONG THE SURVIVING MEMBERS OF THE CLASS.

CONSIDERATION

SOMETHING OF VALUE; IN A LIFE CONTRACT IT WOULD BE THE INUSRED'S PREMIUM PAYMENTS AND THE INSURER'S PROMISE TO PAY THE DEATH BENEFIT

MISSTATEMENT OF AGE

STATING THE WRONG AGE

MISSTATEMENT OF SEX

STATING THE WRONG GENDER

PRIMARY BENEFICIARY

THE FIRST IN LINE TO RECEIVE THE POLICY'S DEATH BENEFIT

GRANTOR

THE INDIVIDUAL WHO SETS UP THE TRUST, TRANSFERS PROPERTY INTO IT, AND WRITES THE INSTRUCTIONS AS TO HOW THE TRUST WILL OPERATE.

PAYMENT OF CLAIMS

THIS PROVISION STATES THAT THE INSURER WILL PAY THE DEATH BENEFIT PROMPTLY.

BENEFICIARY - INDIVIDUAL

THIS TYPE OF BENEFICIARY MUST HAVE AN INSURABLE INTEREST AT THE TIME OF POLICY PURCHASE AND BE CLEARLY IDENTIFIED.

SUICIDE EXCLUSION

UNDER THIS EXCLUSION, IF THE INSURED DIES DURING THE STATED PERIOD, THE POLICY'S DEATH BENEFIT IS NOT PAYABLE, BUT ALL PREMIUMS PAID FOR THE POLICY ARE REFUNDED.

MISSTATEMENT OF SEX

IF THIS OCCURS, THE FACE AMOUNT OF THE POLICY WILL BE ADJUSTED SIMILAR TO THE ADJUSTMENT IN THE MISSTATEMENT OF AGE.

PAYMENT OF CLAIMS

THE INSURANCE COMPANY IS GENERALLY REQUIRED TO PAY A DEATH CLAIM WITHIN 60 DAYS AFTER RECEIVING NOTIFICATION OF THE CLAIM. IF THE CLAIM PAYMENT IS MADE MORE THAN 60 DAYS AFTER NOTIFICATION OF THE CLAIM, INTEREST MUST BE PAID.

CONTINGENT BENEFICIARY

THE NEXT IN LINE TO RECEIVE THE POLICY'S DEATH BENEFIT IF THE PRIMARY BENEFICIARY DIES.

OWNERSHIP RIGHTS

THE OWNER OF A POLICY MAY EXERCISE ALL POLICY RIGHTS AND PRIVILEGES WITHOUT THE CONSENT OF ANY BENEFICIARY

TRUSTEE

THE PARTY THAT MANAGES THE PROPERTY ACCORDING TO THE GRANTOR'S INSTRUCTIONS; THIS PARTY MAY BE AN INDIVIDUAL OR ANOTHER LEGAL ENTITY.

BENEFICIARY

THE PERSON OR ENTITY WHO WILL GET THE DEATH BENEFIT.

BENEFICIARY OF TRUST

THE PERSON WHO RECEIVES THE BENEFITS OF THE TRUST.

ENTIRE CONTRACT

THE PROVISION STATES "NO STATEMENT SHALL VOID THIS POLICY OR BE USED IN DEFENSE OF A CLAIM UNDER IT UNLESS CONTAINED IN THE APPLICATION" AND REINFORCES THE IDEA THAT THE POLICY ITSELF CONSTITUTES THE ENTIRE CONTRACT ALONG WITH A COPY OF THE ORIGINAL APPLICATION

WAR OR MILITARY SERVICE EXCLUSION

THE RESULTS-TYPE ELIMINATES COVERAGE ONLY IF THE CAUSE OF DEATH WAS RELATED TO MILITARY SERVICE.

WAR OR MILITARY SERVICE EXCLUSION

THE STATUS-TYPE VERSION ELIMINATES COVERAGE FOR THE ENTIRE PERIOD DURING WHICH THE INSURED IS IN THE MILITARY, REGARDLESS OF HOW THE INSURED DIES.

GRACE PERIOD

THIS PROVISION ALLOWS A POLICY TO STAY IN FORCE FOR UP TO 31 DAYS STARTING FROM THE DAY A PAYMENT IS MISSED

COMMON DISASTER PROVISION

THIS PROVISION EXPANDS UPON THE INTENT OF THE UNIFORM SIMULTANEOUS DEATH ACT BY PROVIDING A MORE LENIENT TIME SPAN - USUALLY 30 TO 90 DAYS - BETWEEN THE DEATH OF THE INSURED AND THE PRIMARY BENEFICIARY WHEN BY A COMMON ACCIDENT.

FREE LOOK / RIGHT TO EXAMINE PROVISION

THIS PROVISION GIVES THE POLICYOWNER A PERIOD OF TIME TO RETURN A POLICY FOR ANY REASON WITHIN TEN DAYS OF DELIVERY AND RECEIVE ALL PREMIUMS PAID; THE POLICY WILL BE CONSIDERED NULL AND VOID.

SPENDTHRIFT PROVISION

THIS PROVISION REQUIRES THAT THE POLICY PROCEEDS BE PAID TO THE BENEFICIARY IN INSTALLMENTS OF A DEFINED AMOUNT AND AT SET INTERVALS, AND THE BENEFICIARY HAS NO RIGHT TO ELECT A DIFFERENT SETTLEMENT.

IRREVOCABLE BENEFICIARY

A BENEFICIARY DESIGNATION THAT CANNOT BE CHANGED OR CAN ONLY BE CHANGED WITH THE BENEFICIARY'S WRITTEN CONSENT.

EXCLUSIONS

EXCEPTIONS THAT DEINE WHEN COVERAGE DOES NOT APPLY

SUICIDE CLAUSE

THIS PROVISION STATES THAT IF AN INSURED, WHETHER SANE OR INSANE, COMMITS SUICIDE DURING THE FIRST TWO YEARS AFTER A LIFE INSURANCE CONTRACT HAS BEEN ISSUED, THE COMPANY WILL PAY ONLY THE PREMIUM PAID BY THE INSURED, NOT THE FACE AMOUNT OF THE POLICY.

PAYMENT OF PREMIUM

THIS PROVISION STATES THAT PREMIUMS ARE DUE IN ADVANCE

COLLATERAL ASSIGNMENT / TEMPORARY OR CONDITIONAL ASSIGNMENT

THIS ASSIGNMENT DOES NOT CHANGE OWNERSHIP OF THE POLICY AND IS MOST COMMONLY USED TO PLEDGE ALL OR PART OF THE DEATH BENEFIT AS COLLATERAL FOR A LOAN

FACILITY OF PAYMENT PROVISION

THIS PROVISION ALLOWS THE INSURER TO PAY ALL OR PART OF THE POLICY'S DEATH BENEFIT TO SOMEONE OTHER THAN A DESIGNATED BENEFICIARY.

BENEFICIARY - ESTATE

THIS TYPE OF BENEFICIARY CAN BE DESIGNATED AND USED TO PAY DEBTS AND THE COSTS OF LEGALLY CLOSING THE ESTATE. LIFE INSURANCE PROCEEDS ARE COUNTED TOWARD THE TOTAL VALUE OF THE ESTATE FOR ESTATE TAX PURPOSES.

BENEFICIARY - CLASSES

THIS TYPE OF BENEFICIARY DOES NOT HAVE TO BE CLEARLY IDENTIFIED BUT REQUIRES INSURABLE INTEREST AT THE TIME OF THE POLICY PURCHASE.

BENEFICIARY - TRUST

THIS TYPE OF BENEFICIARY IS A LEGAL ENTITY THAT CAN HOLD TITLE TO PROPERTY WHILE IT IS MANAGED FOR THE BENEFIT OF OTHERS.

TERTIARY BENEFICIARY

THE THIRD IN LINE TO RECEIVE THE POLICY'S DEATH BENEFIT IF THE PRIMARY AND CONTINGENT BENEFICIARY DIES.

UNIFORM SIMULTANEOUS DEATH ACT

THIS ACT DIRECTS THAT IN THE EVENT THE INSURED AND PRIMARY BENEFICIARY BOTH DIE AS A RESULT OF THE SAME ACCIDENT, IT IS ASSUMED THAT THE PRIMARY BENEFICIARY DIED FIRST.

ABSOLUTE OR PERMANENT ASSIGNMENT

THIS ASSIGNMENT TRANSFERS ALL RIGHTS OF OWNERSHIP TO ANOTHER PERSON OR ENTITY

HAZARDOUS OCCUPATION OR HOBBY EXCLUSION

THIS EXCLUSION ELIMINATES COVERAGE IF THE INSURED ENGAGES IN ACTIVITIES SUCH AS AUTO RACING, SKY DIVING, OR SCUBA DIVING, EITHER FOR PAY OR RECREATION.

AVIATION EXCLUSION

THIS EXCLUSION ELIMINATES COVERAGE ONLY FOR CERTAIN TYPES OF AVIATION ACTIVITIES, SUCH AS PRIVATE PILOTS, TEST PILOTS, MILITARY PILOTS AND CREW, ETC.; IT DOES NOT APPLY TO COMMERCIAL FLIGHT.

REINSTATEMENT

THIS PROVISION ALLOWS THE RESTORATION OF A LAPSED POLICY AS ORIGINALLY PURCHASED

ASSIGNMENT

THIS PROVISION ALLOWS THE TRANSFER OF THE OWNER'S RIGHTS, IN WHOLE OR PART, TO ANOTHER INDIVIDUAL OR ENTITY

FACILITY OF PAYMENT PROVISION

THIS PROVISION APPLIES IF SOMEONE OTHER THAN THE BENEFICIARY INCURRED THE INSURED'S FINAL MEDICAL OR FUNERAL EXPENSES.

FACILITY OF PAYMENT PROVISION

THIS PROVISION APPLIES IF THE BENEFICIARY IS A MINOR, IS DECEASED, OR CANNOT BE FOUND.

INCONTESTABILITY

THIS PROVISION IS PROVIDED TO PROTECT THE INSURED; IT STATES THAT AFTER A LIFE INSURANCE POLICY HAS BEEN IN EFFECT FOR TWO YEARS THE COMPANY CANNOT CLAIM THAT A STATEMENT MADE IN THE APPLICATION FOR INSURANCE WAS MEANT TO DEFRAUD THE INSURER

INSURING CLAUSE / AGREEMENT

THIS PROVISION, SIGNED BY AN AUTHOIRZED OFFICER OF THE COMPANY, SETS FORTH THE INSURER'S PROMISE TO PAY BENEFITS UPON THE INSURED'S DEATH; IT INCLUDES WHAT THE COMPANY WILL PAY, THE DEATH BENEFIT AMOUNT, AND TO WHOM IT WILL BE PAID