Unit 7 Life and Health

Free Look

Period (usually 10 days) starting when owner receives policy, allowing full refund if returned

Insuring Clause

Found on the first page; insurer's promise to pay upon death, including face amount, signed by a company officer

Ownership Rights

Include naming beneficiaries, choosing payment method, borrowing/withdrawing cash values, receiving dividends, surrendering, assigning, and choosing premium mode

Collateral Assignment

Pledging the policy as collateral for a loan

Absolute Assignment

Complete change of policy ownership

Entire Contract

The policy, application copy, and any riders or amendments combined

Modifications

Changes to the policy can only be made by the company, though the owner can request them

Consideration (policy provision)

Value given by the policyowner: information in the application plus premium

Grace Period

Usually 31 days after a missed due date during which insurance stays in force; death benefit paid minus premiums due

Reinstatement

Restoring a lapsed policy within up to three years by paying missed premiums plus interest and proving insurability

Incontestability Provision

Usually after two years, insurer can't contest the policy due to material misrepresentation or fraud

Misstatement of Age or Gender

Death benefit is adjusted to what the premium would have purchased at the correct age/gender; incontestability doesn't apply

Time Payment of Claims

Claims usually paid immediately, no longer than 60 days

Per Capita

Multiple beneficiaries in a class share equally "by the head"; not inheritable

Per Stirpes

Multiple beneficiaries in a class share "by branch"; inheritable

Primary Beneficiary

First in line to receive benefits

Contingent (Secondary) Beneficiary

Receives benefits if no primary beneficiary is alive

Tertiary Beneficiary

Receives benefits if no primary or contingent beneficiary is alive

Revocable Beneficiary

Can be changed by the owner at any time

Irrevocable Beneficiary

Can't be changed without the beneficiary's consent; must consent to loans/withdrawals

Facility of Payment Provision

Allows the insurer to pay someone other than the named beneficiary

Common Disaster Provision

If insured and primary beneficiary die within 30-90 days of a common accident, proceeds pay as if primary beneficiary died first, going to the contingent beneficiary

Uniform Simultaneous Death Act

If insured and primary beneficiary die in the same accident at the same time, primary beneficiary is assumed to have died first; proceeds go to contingent beneficiary

Spendthrift Provision

Prevents death benefit from being paid in a lump sum, claimed by creditors, or used as loan collateral by the beneficiary

Suicide Exclusion

Death by suicide not covered before 2 years (may vary)

Aviation Exclusion

Excludes death due to airplane accident, unless a passenger/crew member of a commercial airline

War/Military Exclusion (Status Type)

Excludes death occurring while in the military, regardless of cause

War/Military Exclusion (Results Type)

Excludes death related to military activity