02 Riders, Provisions, Options & Exclusions

Pearson Section II — Texas Life Agent Exam. Riders, beneficiary rules, premium mechanics, cash-value options, contract provisions, and exclusions

Waiver of Premium vs Waiver of Monthly Deduction

Waiver of Premium waives qualifying premiums; Waiver of Monthly Deduction covers qualifying monthly policy deductions.

Guaranteed Insurability Rider

Allows additional coverage at specified times without new evidence of insurability.

Payor Benefit Rider

Helps keep coverage in force if the person paying premiums dies or becomes disabled under rider terms; often seen with juvenile policies.

Accidental Death vs AD&D

Accidental Death adds benefit for qualifying accidental death. AD&D can also pay for qualifying dismemberment losses.

Term Rider and Other Insured Rider

Term Rider adds temporary term coverage. Other Insured Rider adds coverage on another person.

Long-Term Care Rider vs Accelerated Death Benefit

LTC Rider pays for qualifying long-term-care needs. Accelerated DB allows qualifying early access to part of the death benefit.

Return of Premium Rider

Returns eligible premiums under specified rider conditions. Do not automatically confuse it with a Return of Premium term policy.

Disability Rider and Cost of Living Rider

Disability Rider adds benefits tied to qualifying disability. Cost of Living Rider adjusts benefits for inflation/cost-of-living changes.

Owner Rights

Policyowner controls contractual rights such as changing permitted beneficiaries, assigning rights, loans, and other policy choices.

Primary vs Contingent Beneficiary

Primary = first in line for proceeds. Contingent = backup if the primary cannot receive them.

Revocable vs Irrevocable Beneficiary

Revocable = owner can generally change without consent. Irrevocable = changes generally require beneficiary consent.

Other Beneficiary Designations

Common disaster addresses uncertain order of death; minors may need special handling; class designation names a group such as "my children."

Premium Modes, Level Premium, Flexible Premium

Premium mode = payment frequency. Level = scheduled level premium. Flexible = payment amount/timing may vary within policy rules.

Grace Period vs Reinstatement

Grace Period = premium is late but policy temporarily remains in force. Reinstatement = restoring a policy after it has lapsed.

Automatic Premium Loan

Uses available cash value to create a policy loan that pays an overdue premium when the provision applies.

Policy Loan vs Withdrawal / Partial Surrender

Loan = borrow against policy value. Withdrawal/partial surrender = permanently remove part of policy value.

Nonforfeiture Options

Choices that preserve some accumulated cash value when a cash-value policy is surrendered or premiums stop.

Participating, Nonparticipating, and Dividends

Participating policy may pay dividends; nonparticipating does not. Dividend options determine how a dividend is used.

Settlement Options

Choices for how life insurance proceeds are paid, such as lump sum or income-based payment methods.

Entire Contract vs Insuring Clause

Entire Contract = what documents make up the agreement. Insuring Clause = insurer's basic promise to provide coverage/pay benefits.

Free Look and Consideration

Free Look = time to review and return a newly delivered policy. Consideration = value exchanged by the parties to form the contract.

Incontestability vs Suicide Provision

Incontestability limits certain policy challenges after the applicable period. Suicide provision applies special rules to death by suicide.

Assignments and Misstatement of Age/Gender

Assignment transfers policy rights/interests. Misstatement provision adjusts benefits/premium using the correct age or gender.

Policy Exclusions

War, aviation, and dangerous occupation are Pearson-listed exclusion categories: situations the policy may not cover.