27 terms

HS 311 Chapter 9: Life Insurance Policy Provisions

the person or persons who are entitled to receive death benefits (on a life policy)
standard policy provisions laws
state requirements for life and health insurance to ensure that they contain certain "base" provisions
grace period
the time period that a policyowner has to pay a premium after its initial due date (without the policy lapsing)
late remittance offer
an offer by the insurer that would allow the policyowner to reactivate a policy after it has lapsed from nonpayment
policy loans
money borrowed from life policies that generate a cash value; properly-paid loans cannot result in policy termination
automatic premium loan option
an option in which any late premiums are systematically paid by a new policy loan
direct recognition
a condition in which whole life policy dividends are reduced when outstanding loan policies are in effect
incontestable clause
a provision that prohibits the insurer from disputing or contesting the validity of the policy after it has been in effect for a certain time period
divisible surplus
the portion of the insurer's surplus that is declared to be distributed via policy dividends
dividend options
the various ways that policy dividends can be used
fifth dividend option
the ability to use a whole life policy's dividend to purchase 1-year term insurance for the policy's current cash value
entire contract provision
a law that states the life policy and the application constitute the entire contract; it cannot be changed over time
reinstatement provisions
allows a policyowner to reacquire coverage under a policy that has lapsed
misstatement of age or gender clause
a provision that mandates the premiums be adjusted if the insured's age or gender are misrepresented in the application (versus cancelling the policy)
nonforfeiture options
laws that require the policyowner to be able to use a whole life policy's cash value (typically after a minimum period such as 3 years)
settlement options
alternative methods of paying the death benefits of a policy (e.g. lump sum, annuity payments)
primary beneficiary
the person or organization that is to receive death benefits if he, she, or it survives the insured
contingent beneficiary
the receiver of death benefits if the primary beneficiary is deceased first or becomes ineligible
contingent payee
the receiver of death benefits that begins receiving payments if the original beneficiary becomes deceased during the payment period
suicide provision
an optional inclusion for suicide during the policy's entire period (it is typically not covered for the first 1-2 years)
ownership provision
describes the rights of the owner in management of the policy
assignment provision
describes the rights of the owner to transfer ownership of the policy to someone else
plan change provision
an option that allows the policyowners to change some aspects of the policy
accelerated benefits provision
an option that allows the policyowner to withdraw a portion of the death benefit under certain circumstances (e.g. the insured becomes terminally ill)
add accidental death benefits
an option that pays "double indemnity" if the insured dies accidentally
guaranteed purchase (insurability) option
allows the policyowner to buy additional amounts of coverage for the insured, without providing proof of continued/current insurability
waiver-of-premium rider
an option in which the insurer will waive premium payments if the insured becomes totally disabled