Flashcards in contract law and legal factors affecting underwriting Deck (95)
what can be/ usually is included on the face page of an application?
description of the plan, and describe the free-look provision. This will be followed by required statutory provisions, optional policy provisions, and additional benefits or riders. a copy of the application will be included in the policy.
What is the purpose if the entire contract provision?
this specific that the polic and the application make the entire contract.
-it prohibits the insuere from later adding aggrements or conditions to the policy
-it includes the representations made by the applicant upon which the insuere relied in issuing the policy
In Canada, what is included in the entire contract- as per the provision law?
application, policy, any document attached to policy at issue, and amendment to the contract in writing after the policy is issed.
- there is no rule that the application must be attached to the policy (except in quebec) but most companies do so.
define the incontestable clause provision
this provides that after a policy has been in force for a period of 2 years, during the lifetime of the insuered, the policy becomes incontestable- that is the insurance company cannot contest the policies validity.
most incontestable clauses state that the policy can be contested by the insuere in the first two policy years, during the lifetime of the insured. What does that mean, and why is it there?
the policy cannot become incontestible if the insuered dies within the first two years of the policy in force.
this is to prevent a beneficiary from delaying the submission of a claim until after the contestable period has expired.
what is different in canada, from the us, in terms of incontestable period?
a fraudulent statement can void a contract beyond the two year period. This can apply even to a misstatement of smoking history.
what is the purpose of the misstatement of age provision?
covers the procedure for correcting an insured's age that is innocently misstaed. If the error is discovered after death the benefits can be denied.
what is the grace period provision?
this defines the time beyong the premium due date in which the premiums must be accepted by the insuere.
-coverage continues in this period
what is the average length of the grave period?
what does the reinstatement provision allow for the insured?
provides them with the requirements and the time period in which a policy can be pit back in force after it has lapsed for nonpayment of premiums.
typically a policyowner will be able to apply to reinstate a lapsed policy withint 3-5 years of a policy lapse.
do companies allow for reinstatement of a policy that has been surrendered>
when will canada allow for the right to reinstate a policy, and what is required>
-past due premium and other indebtedness plus interest, must be paid and evidence of insurability satisfactory to the insuere must be submited.
is in it canada or the US where the suicide clause will be renewed with reinstatement?
What does the Dividned Provision mandate?
payment of dividends on participating policies and also describes available dividend options.
what does the basic dividend option include?
payment in cash,
reduction of the current premium
purchase of paid-up additional coverage
purchase of one-year term
or holding to accumulate at interrest.
what is the nonforfeiture provision/guaranteed policy value for?
should a policy terminate with cash value, the policyowner will be given the option to surrender the policy for cash, to purchase paid-up insurance for a reduced amount, or to purchase extended term insurance for the net faceamount.
in canada does the Uniform life insurance act require insurers to give the insured the right to elect nonforfeiture benefits?
no, however, on perm policies theres options are usually included.
what does the Quebec Civil code states what in terms of benefits and dividends?
they must be applied to any premium to keep the policy in force, unless otherwise stipulated
what is the purpose of the policy loan provision?
it defines the right to borrow from the cash value of the policy and describes the impact of a policy loan on the policy proceeds from the repayment of the loan and on the policy loan interest.
an outstanding loan amount will be deducted from ____ should the policy owner surrender the policy.
the cash value,
when will a policy laspe interms of indebtedness?
when there is unpaid interrest, this will be added to the indebtness on the contract. A policy will lapse when the total indebtedness exceeds the loan value.
under the automatic premium loan provision, what can happen to an overdue premium?
it auto creates a loan on the policy, if there is sufficient loan value to pay the premium.
are optional policy provision required by law?
no, but are commonly used
what is an ownership provision?
rights of policy owners, rights include
- abilioty to change revocable beneficiaries
-access policy values
-obtain a policy loan
-surrender the policy for its values.
how does the ownership provision differ in canada?
does not necesarily describe the procedure for transfering ownership.
is it in canada or the us where the owners rights are limited when there is an irrecovable beneficiary named?
What is assignment provision?
transfering ownership rights to another person. ie. insurance policy as a gift, sale, or pledge as collateral for a loan
which assignment provision can be used to gift or sell the policy?
an absolute assignment. it will not cancel an irrevocable beneficiary's rights unless the beneficiary consents.
how can someone preform a collateral assignment?
by utulizing the policy as collateral for a loan with financial institution. This type of assignemnt is temporary and the owner rights are revert upon repayrment of the loan.