Life Insurance Policy Flashcard

Front

Waiver of Premium rider

Back

Suspends premium payments if the insured becomes totally disabled

Answer explanation

The 'Waiver of Premium' rider suspends premium payments if the insured becomes totally disabled, ensuring coverage continues without financial burden during a disability.

Front

Which rider allows the insured to buy more coverage at set intervals without proving insurability?

Back

Guaranteed Insurability

Answer explanation

The Guaranteed Insurability rider allows the insured to purchase additional coverage at specified intervals without needing to provide proof of insurability, making it a valuable option for increasing protection over time.

Front

What is the purpose of the 'Payor Benefit' rider?

Back

Waives premiums if the payor dies or becomes disabled

Answer explanation

The 'Payor Benefit' rider waives premiums if the payor dies or becomes disabled, ensuring that the policy remains in force without financial burden during difficult times.

Front

Which provision states that the policy and application constitute the entire contract?

Back

Entire Contract

Answer explanation

The 'Entire Contract' provision states that the policy and application together form the complete agreement between the insurer and the insured, ensuring no other documents alter the terms.

Front

What does the 'Free Look' provision allow?

Back

Timeframe to cancel the policy for a full refund

Answer explanation

The 'Free Look' provision allows policyholders a specific timeframe to review their policy and cancel it for a full refund if they are not satisfied, ensuring they have a chance to reconsider their decision.

Front

What is the 'Consideration' in a life insurance policy?

Back

The value exchanged, such as premiums for coverage

Answer explanation

In a life insurance policy, 'Consideration' refers to the value exchanged, specifically the premiums paid by the policyholder in return for the coverage provided by the insurer.

Front

Which option allows the policy owner to borrow against the cash value for home repairs?

Back

Owner's Rights

Answer explanation

Owner's Rights allow the policy owner to access the cash value of their policy, enabling them to borrow funds for purposes like home repairs. This option is specifically designed for such financial needs.

Front

What happens if a policy lapses and the owner chooses the 'Extended Term' nonforfeiture option?

Back

The policy is converted to a term policy for a limited time

Answer explanation

If a policy lapses and the owner selects the 'Extended Term' option, the policy is converted to a term policy for a limited time, allowing coverage without additional premium payments.

Front

Incontestability clause in a life insurance policy

Back

Prevents the insurer from voiding the policy after 2 years, except for fraud

Answer explanation

The 'Incontestability' clause prevents the insurer from voiding the policy after 2 years, except in cases of fraud. This protects the insured by ensuring that the policy remains valid despite any initial misstatements.

Front

What does the 'Suicide' exclusion in a life insurance policy entail?

Back

No death benefit if suicide occurs within the exclusion period

Answer explanation

The 'Suicide' exclusion in a life insurance policy means that if the insured commits suicide within a specified exclusion period, no death benefit will be paid out. This is to prevent potential abuse of the policy.