Chapter 11 - Required Provisions Flashcards
A lot of contract law from chapter 5 but new terms
Assignment Clause - Collateral or Temporary assignment - occurs when the owner uses the policy’s cash value to secure a debt/loan. Temporarily transfers ownership to the creditor, which becomes the beneficiary. When the loan is repaid, the creditor releases ownership back to the original policy owner.
Absolute Assignment - when the owners transfers the entire policy over to the ASSIGNEE, could be done as a gift, estate planning tax technique, or part of divorce.
Loan Values:
only applies to permanent/whole life policies.
Insured has right to borrow against the cash value
States an interest rate, usually 8%
Requires enough collateral in the cash account to pay the loan and interest.
Time Limit on Lawsuits: requires lawsuits to be filed within 3 years by a policy owner against the insurer. You also have to wait 60 days prior to filing a lawsuit.
