Life Insurance Provisions

cso683's version from 2016-02-02 17:22

Section Provisions

Question Answer
Standard Life Insurance ProvisionsIROPE GAMER - Incontestability - after 2 years, insurer cannot contest claims, Right to Exam (Free Look) - 10 days for policy owner to review and return policy, Ownership - Policy owner owns and has rights, Payment of Premiums - when they are due and to whom to pay, Entire Contract - Policy and copy of application is the entire contract
Standard Life Insurance Provisions (cont.)GAMER - Grace Period - (30/31 days), period after premium is due that insured is still covered, Assignment - Policy owner has the right to transfer ownership, Misstatement of Age/Gender - Insurer always allowed to adjust benefit if these are concealed, Exclusions - types of risk that the policy will not cover, Reinstatement - within 3 years, a lapsed policy can be renewed by paying up premiums plus interest
Types of Assignment of Life InsuranceAC - Absolute (complete transfer of all rights), Collateral (partial transfer (for a loan))
Exception to 10 day Free LookCRAG - Credit Life, Replacement policies (30 days), Any other policies decided by Insurance Commissioner, Group Policies
ExclusionsSHAW - Suicide (excluded for 2 years after policy effective date), Hazardous Activities or Occupations, Aviation, War
War ClausesStatus Clause (excludes all benefits while on active duty), Effects Clause (only excludes the death benefit if killed as a result of act of war

Section Beneficiaries

Question Answer
Designation OptionsTICE - Trusts, Individuals, Class, Estate
Beneficiary TermsDRSCS - Designation Options, Revocable or Irrevocable (cannot change without beneficiary consent), Succession, Common Disaster Clause, Spendthrift Clause
Classes of BeneficiariesPer Capita (by the head) - Descendants don't get benefits, Per Stripes (by the bloodline) - Descendants DO get benefits
Succession of BenefitsPrimary -> Secondary (contingent) -> Tertiary
Common Disaster ClauseAssume Primary beneficiary is assumed to have died first (proceeds will pass to Secondary Beneficiary)
Spendthrift ClauseProtects fixed payment life insurance proceeds from the creditors of the beneficiary

Section Cash Loans / Withdrawals

Question Answer
Time periods in Cash Loans30 days notice must be given that a policy will lapse (due to too low of cash value), insurer may defer a loan request for up to 6 months
Cash Value MathLoan Value = Cash Value - (unpaid loans + interest)
Automatic Premium LoansAutomatic loan to pay unpaid premium (cannot be deferred by insurer)
Withdrawals of partial surrendersUniversal life allows partial surrender of policy

Section Riders

Question Answer
Types of RidersDAD - Disability Riders, riders affecting Additional insured, riders that effect Death benefit
Disability RidersDWP - Disability Income (waive premium and pay income), Waiver of premium (if insured is totally disabled after 6 months), Payor Benefit (waives payments for minors until they reach 21)
Additional Insured RidersSFC - Spouse/Other-Insured rider (usually level term and for a specific period of time), Family Term (Family Term = Spouse Term + Children's Term), Children's Term (adds children for no additional charge),
Death benefit RidersGLARE CAC - Guaranteed Insurability (can purchase additional insurance without increase in premium), Long-term Care (Accelerated Benefits Rider allows for money to be used for care), Accidental Death (pays 2 or 3 X death benefit from an accident), Return of Premium (Face value and premiums returned to beneficiary (expires at age 60)), Effect on Death Benefit - Death benefit = Face Amount - Amount withdrawn - Lost Interest
Death benefit Riders (cont,)CAC - Cost of living (increases the death benefit by Consumer Price Index), Accelerated (Living) Benefit (Early payment of some of the death benefit), Conditions for Payment (Early payment allowed for terminal illness, etc.)

Section Options

Question Answer
Life Insurance Option CategoriesNDS - Nonforfeiture, Dividend, Settlement
Nonforfeiture OptionsCER - Cash Surrender Value (turn it in and no longer covered), Extended Term (Turns the face value into term insurance), Reduced Paid-up Insurance (Use cash value to buy a smaller, paid-up policy)
Dividend OptionsCRAPPO - Cash Payment, Reduction of Premium Payments, Accumulation at Interest (Interest on Dividends is taxable if withdrawn), Paid-up Additions (Buys small additional paid-up policies), Paid-up Insurance (Pays off policy faster), One Year Term Option (Short term additional insurance)
Settlement OptionsCLIFF LJS LJS - Cash Payment, Life Income, Interest Only, Fixed-Period Installments, Fixed-Amount Installments, Life with Period Certain, Joint and Survivor, Single Life, Life Refund, Joint with Term Certain, Straight Life
Settlement ExpandedSingle Life - Life time income for one person, Joint and Survivor - income for one person and reduced benefits for another, Life with Period Certain - lifetime income and guaranteed period to beneficiaries, Life Refund - Cash Refund (lump sum to beneficiary) or Installment Refund (payments made to beneficiaries)
Settlement Expanded (cont.)Interest Only (interest paid to surviving spouse with lump sum to kids when they reach 21), Fixed-Period Installment (Distribute the principal for a fixed period of time), Fixed-Amount Installments (Distribute the principal a fixed amount at a time), Joint with Term Certain (Pays 2 people until one dies or end of term)