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37 Cards in this Set
- Front
- Back
Insuring Clause
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ER's basic promise to pay benefits in accordance with the policy issued
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Execution Clause
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states when the insurance contract will go in effect
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Free-Look Provision
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begins when the policy is delivered to the policyowner, and allows the policyowner the right to refuse and return the policy for a full premium refund
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Consideration Clause
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stipulates the basis on which the company issues the contract
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-change the beneficiary
-receive dividends -take out policy loans -partially/completely sign the rights of the contract to another party |
Owners right include:
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Grace Period Provision
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time that a policy stays in force after the premium due date (even though no premium has been paid)
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Incontestable Clause
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states the policy must be incontestable after it has been in force during the lifetime of the ED for a period of 2 years from its date issued
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Automatic Premium Loan Provision
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If the premium becomes past due by a certain number of days, the ER is authorized to withdraw from the policys cash value the amount of premium due
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Privelege of Change Clause
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allows the ED to change to another type of insurance without proving insurability
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Collateral Assignment
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the transfer of benefits or payments under a life policy to a creditor as part of the security for a loan
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Absolute Assignment
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if all control and rights are fiven to the third party
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Voluntary Assignment
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when the policyowner intentionally chooses to assign all ownership rights in the poicy over to another person
Example- when a parent gives their child a poicy after the child reaches adulthood |
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Interest Only Option
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insurance company retains the death proceeds and invests them for the benficiary. The ER then pays a stated amount of interest to be paid to the beneficiary at regular intervals for a specified period of time
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Fixed Amount Option
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a certain amount is chosen to be paid to the beneficiary in regularly scheduled intervals
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Fixed Period Option
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company pays the beneficiary equal payments at regular intervals over a specified period of time
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Joint and Survivor Life Income Option
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pays a lifetime income to the beneficiary, then a reduced benefit to a second payee upon the death of the first payee
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Straight Life Income Option
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beneficiary recieves a guaranteed income for life, regardless of how long he/she lives
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Refund Annuity Option
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guarantees that an income will be paid for the lifetime of the beneficiary and to the contingent beneficiary if the primary beneficiary dies before receiving an equal amount
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Life Income Certain
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beneficiary will recieve payments for life
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Viatical Settlements
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a terminally ill insured assigns his/her insurance policy to a viatical settlement company in exchange for a lump sum payment equal to a percentage of the policys face value
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Accelerated Benefits
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allows ED who are terminally ill to access a percentage of policy death benefitsbefore dying
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Section 1035 : Policy Exchange
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deals with the ltransfer of lifeinsurance and annuity policies from one company to another on a tax-free basis
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1. Filing Method
2. Endorsement Method |
Two methods of naming a beneficiary:
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Filing Method
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(AKA: recording method) -- any beneficiary change must be requested in writing to the ER, the ER then records the change
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Endorsement Method
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requires that the change of beneficiary be typed or attached to the policy
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1. Family
2. Creditor/Debtor 3. Business 4. Trusts 5. Estate 6. Charities 7. Minors |
Allowable Beneficiaries (insurable Interest) include:
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Irrevocable Trusts
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cant be changed or canceled once it is put in place without the consent of the beneficiary
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Revocable Trusts
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may be changed or terminated during the grantors lifetime
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1. Primary
2. Contingent 3. Tertiary |
Succession of Beneficiaries
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Uniform Simultaneous Death Act
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should the ED and the primary beneficiary dies at the same time, this act protects the contingent beneficiary
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Common Disaster Provision
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addresses the issue of the primary beneficiary outliving the ED, even if only for a few days
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Spendthrift Clause
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prevents a beneficiary from assigning or creating a lien against the proceeds
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1. War/Military Service
2. Avaition 3. Hazardous Occupation 4. Commision of a Felony |
Risk Exclusions for life insurance policies include:
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Guaranteed Insurability Rider
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Ed can purchase additional insurance regardless of their health at specified ages, date, events
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Waiver of Premium (WP)
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it protects the policy from lapsing for nonpaymentof premiums if the owner becomes totally and permanently disabled
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1. the disability must be permanent
2. waiting period is 3-6 months 3. waiver typically stops at age 60 or 65 |
3 stipulations with Waiver of Premiums:
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Cost of Living Adjustment (COLA)
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guard against inflation and to prevent insurance coverage form falling behind the increasing cost of living
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