Chapter 12 Vocab (Notes) Flashcards Preview

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Flashcards in Chapter 12 Vocab (Notes) Deck (29):
1

Ownership Clause

policyowner possesses all contractual rights in the policy while the insured is living

2

Entire Contract Clause

life insurance policy and attached application constitute the entire contract between the parties

3

Incontestable Clause

the insurer cannot contest policy after it has been in force two years during insured's lifetime

4

Reinstatement Provision

permits the owner to reinstate a lapsed policy

5

Grace Period

the policyholder has a period of 31 days to pay an overdue premium

6

Misstatement of Age or Sex Clause

if the insured's age/sex is misstated, the amount payable is the amount that the premiums paid would have purchased if correct

7

Beneficiary

the party named in the policy to receive the proceeds

8

Primary Beneficiary

1st entitled to receive proceeds on the insured's death

9

Revocable Beneficiary

means the policyholder reserves the right to change the beneficiary without the beneficiary's consent

10

Irrevocable Benficiary

one that cannot be changed without beneficiary consent

11

Specific Beneficiary

is specifically identified

12

Class Beneficiary

member of a group

13

Change of Plan Provision

allows policyholders to exchange their present policies for different contracts

14

War Clause

excludes payment if insured dies as a direct result of war

15

Absolute Assignment

all ownership rights are transferred to a new owner

16

Collateral Assignment

policyowner temporarily assigns a life insurance policy to a creditor as collateral for a loan, but only certain rights are transferred to the creditor

17

Policy Loan Provision

allows policyowners to borrow the cash value

18

Automatic Premium Loan Provision

an overdue premium is automatically borrowed form the cash value after the grace period expires

19

Participating Policy

a policy that pays dividends

20

Nonparticipating Policy

a policy that does not pay dividends

21

Nonforfeiture Value/Cash Surrender Value

payment to a withdrawing policyowner

22

Life Income Option

installment payments are paid only while the beneficiary is alive and cease on the beneficiary's death

23

Waiver of Premium Provision

if the insured becomes totally disabled, all premiums coming due during the period of disability are waived

24

Guaranteed Purchase Option

permits the policyowner to purchase additional amounts of life insurance at specified times in the future without evidence of insurability

25

Accidental Death Rider

twice the face amount of life insurance if the death is a result of an accident

26

Cost of Living Rider

allows policyowners to purchase a one year term to equal to the percent change in CPI with no evidence of insurability

27

Accelerated Death Benefits Rider

allow insureds who are terminally ill to collect art or all of their life insurance benefits before they die

28

Viatical Settlement

sale of life insurance by terminally ill to another party who hope to profit by insured's early doom

29

Life Settlement

policyowner who no longer wants a life insurance policy sells to a third party for more than cash value