Life Insurance Policy Provisions, Options, and Riders

This set of flashcards covers key vocabulary terms related to life insurance policy provisions, options, and riders, enhancing understanding of the subject matter.

Absolute Assignment

A policy assignment where the assignee receives full control over the policy and its benefits.

Accidental Death Benefit Rider

A rider that pays an additional sum to the beneficiary if the insured dies due to a covered accident.

Accelerated Benefits Rider

Allows the insured to receive a portion of the death benefit before death if terminally ill.

Accumulate Interest Option

A dividend option where dividends are left with the insurer to accumulate interest.

Assignment Clause

A clause that allows the transfer of policy rights to another person or entity.

Automatic Premium Loan Provision

A provision that deducts overdue premiums from the insured's cash value.

Cash Option

A dividend option that allows policy owners to cash out the dividends.

Cash Surrender Option

A non-forfeiture option that allows the policy owner to receive the policy's cash value.

Collateral Assignment

Assignment of a policy to a creditor as security for a debt.

Consideration Clause

States that a policy owner must pay a premium in exchange for the insurer's promise to pay benefits.

Dependent Riders

Riders that add dependents as additional insureds to the policy.

Dividend Options

Options available to a policy owner when receiving dividend payments.

Entire Contract Provision

States that the insurance policy and any amendments comprise the entire contract.

Exclusions

Features of an insurance policy stating that it will not cover certain risks.

Extended Term Option

A non-forfeiture option that uses the policy's cash value to buy extended term insurance.

Free-Look Period

A period allowing policy owners to examine and return the policy for a refund.

Grace Period

A period after a premium's due date during which the policy remains in force without penalty.

Guaranteed Insurability Rider

Allows buying additional permanent life insurance coverage without proof of insurability.

Incontestable Provision

States that the insurance company cannot challenge the validity of the policy after a specified period.

Insuring Clause

The insurer's basic promise to pay specified benefits in the event of a covered loss.

Misstatement of Age or Sex Provision

Allows the insurer to adjust policy benefits if the insured's age or sex is misstated.

Non-Forfeiture Options

Options an insured has for cash value if they terminate a policy with cash value.

One-Year Term Option

Allows exchange of dividends for additional coverage in the form of a one-year term policy.

Paid-Up Additions Option

Allows exchange of dividends for an additional single payment whole life policy.

Payor Provision

Waives future premiums for a juvenile policy if the responsible person dies or becomes disabled.

Policy Loan Provisions

Provisions that apply to policies with cash value regarding loans and withdrawals.

Reduced Paid-Up Option

Allows reducing policy benefits and ceasing premium payments.

Reduced Premiums Option

Allows returning dividends to the insurer for a reduction in future premiums.

Reinstatement Provision

Allows putting a lapsed policy back in force with proof of insurability and payment of dues.

Return of Premium Rider

Pays back the total premiums paid if the insured dies within a specified period.

Suicide Clause

States that the policy is voided if the insured commits suicide within two years.

Waiver of Premium Rider

Allows waiver of premium payments during disability to keep the policy in force.