Insurance Policy Terms and Provisions ch 5 quizs

Return of Premium Rider

• Pays the total amount of premiums paid into the policy in addition to the face value if the insured dies within a specific period.

• Provides a cash value accumulation over time regardless of the insured's death.

• Offers a discount on premiums for healthy lifestyle choices.

• Allows the policyholder to borrow against the policy's face value.

Insuring Clause (or Insuring Agreement)

• The insurer’s promise to pay specified benefits to a designated person in the event of a covered loss.

• A statement outlining the exclusions of a policy.

• The process of underwriting an insurance policy.

• A clause that allows for policy cancellation without notice.

Automatic Premium Loan Provision (or Rider)

• Allows the insurance company to deduct overdue premium from an insured’s cash value if a payment is missed.

• Provides a grace period for premium payments without penalties.

• Automatically cancels the policy if premiums are not paid within 30 days.

• Offers a discount on premiums for timely payments.

Incontestable Provision (Period)

• States the insurance company cannot challenge the validity of the policy after a specific period.

• Allows the insurance company to revoke the policy at any time.

• Requires the policyholder to renew the policy annually.

• Enables the policyholder to claim benefits without any waiting period.

Collateral Assignment

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

• Transfer of ownership of a policy to a beneficiary.

• A type of insurance policy that covers collateral damage.

• A legal document that outlines the terms of a loan.

Consideration Clause

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

• Describes the conditions under which a policy can be canceled by the insurer.

• Outlines the rights of the policy owner to change beneficiaries.

• Specifies the duration of the insurance coverage.

Accelerated Benefits Rider

• Allows the insured to receive a portion of the death benefit before death if they have a terminal illness.

• Provides a guaranteed payout upon reaching a certain age.

• Offers a discount on premiums for healthy lifestyle choices.

• Enables the insured to borrow against their policy's cash value.

Reduced Premiums Option

• Allows the policy owner to return the dividend payment for a reduction in the following year’s premium payments.

• Enables the policy owner to increase the coverage amount without additional cost.

• Permits the policy owner to withdraw cash value from the policy at any time.

• Allows the policy owner to convert the policy into a term insurance plan.

Reinstatement Provision

• Allows an insured to put a lapsed policy back in force by providing proof of insurability and paying past-due premiums.

• Allows an insured to cancel a policy without penalty after a certain period.

• Allows an insured to increase the coverage amount without additional underwriting.

• Allows an insured to transfer the policy to another person without restrictions.

Accidental Death Benefit (Multiple Indemnity) Rider

• Pays an additional sum to the beneficiary if the insured dies due to a covered accident, often a multiple of the policy face amount.

• Provides a fixed sum to the beneficiary regardless of the cause of death.

• Covers only natural deaths without any additional benefits.

• Offers a discount on premiums for accidental deaths.