Grants additional time to pay the premium after it has become due, typically 30 days,
Late Remittance Offer
Not typically in the contract, made solely at the discretion of the life insurance co. Some insurers will make this after the grace period has elapsed.
The law requires that a life ins. co. contract permit policy loans if the policy generates a cash value. Gives the policy owner access to the cash value without having to terminate the policy. Most cases, over 90% of cash value is available for loans. Interest is accrued on borrowed funds.
Automatic Premium Loan Option (APL)
When a policy owner SELECTS an APL and delinquent premium is automatically paid by a new policy loan. This keeps the policy in force as long as there is adequate cash to cover each delinquent premium.
Prohibits the insurer from disputing or contesting the validity of the policy after it has been in force for a certain period of time (normally 2 years)
Allow a policy owner to reacquire coverage under a policy that has lapsed. Typically clause states:
1. Must provide evidence of insurability.
2. Must pay all overdue premiums plus interest
3. Must repay any policy loan outstanding, plus interest.
*Misstatement of Age or Gender
The practice is to adjust the policy's premium or benefits to reflect the truth. "This trumps the the 2 year incontestable clause". *The insurance company will adjust the death benefit up or down.
The person or organization that is to receive the proceeds if he, she, or it survives the insured. The policy owner may name more than one beneficiary.
Receives the proceeds of the policy only if the primary beneficiary predeceases the insured or loses entitlement to any of the proceeds for some other reason. (charity goes out of existence)
When life insurance proceeds are payable under a settlement option (other than the lump-sum cash option), a contingent payee, as contrasted with contingent beneficiary, may have claim on the proceeds.
Revocably or Irrevocably
Revocably, can change anytime without the beneficiary's consent. Irrevocably, must obtain consent. Also, often requires consent if want to surrender policy or borrow against cash value.
Most do not provide coverage for suicide within 1-2 years of policy. *Premiums paid back with interest (only benefit).
In contract law, assignment is the act of transferring a property right. The policy owner someone else, or entity, his rights. Must notice the ins. co.
Add Accidental Death Benefits
Added in the form of a rider or amendment to the policy. Known as a double indemnity provision because it usually doubles the standard death benefit if the insured dies accidentally. Typically the death must occur within 90 days of the accident.
Guaranteed Purchase (Insurability) Option
You pay an additional premium which gives you a rider to purchase additional insurance without showing insurability. Not penalized by declining.
Waiver of Premium Rider
If the insured becomes totally disabled the insurance company will waive the premiums. Essentially the insurance company pays the premiums. Waiver of Cost- Universal Life, Waiver of Premium, Whole Life