Life Insurance Policy Provisions

Life Insurance Policy Provisions

• Mode of Premium Payment: Refers to the frequency of premium payments, which can be monthly, quarterly, semi-annually, or annually.

• Reinstating a Lapsed Policy: The insured must provide a written application, evidence of insurability if needed, and pay all overdue premiums plus interest. The selling agent is only required to sign a Notice to the Applicant Regarding Replacement in a replacement transaction.

• Reinstatement Provision Requirement: All individual life insurance policies must include reinstatement provisions, allowing policies to be reinstated within 3 years after default, under specific conditions.

• Designating the Beneficiary: The policy owner has the right to designate and change the beneficiary for policy proceeds.

• Policy Provisions: "Notice of claim" is associated with health insurance, not life insurance.

• Payment of Claims: Life insurance death benefits must be paid within 60 days of notice of a claim, with interest on claims delayed beyond this period.

• Endorsement: A written request for changes to a policy is termed an endorsement or modification, needing acceptance from the insurer.

• Application for Reinstatement: Insurers may request reinstatement applications within 3 years, rather than the commonly assumed 4 years.

• Conditions for Reinstatement: Conditions include submitting an application, paying overdue premiums and debts, and possibly a medical exam—assigning a new beneficiary is not required.

• Insurance Benefits Division: In case of Peggy's term policy, each child would receive $25,000 if she died during the policy term.

• Contestability Period: Reinstating a policy resets the contestability period to 2 years, and premiums remain unchanged from before the lapse.

• Policy Provisions Exclusion: "Cancellation" is specific to health insurance policies, whereas consideration, reinstatement, and endorsements are life insurance provisions.

• Annual Loan Values Table: Policies must include a loan values table for at least 20 years, excluding tables for more than 30 years.

• Consideration Clause: Specifies the amount and frequency of premium payments required to keep the insurance active.

• Entire Contract Clause: States that the policy, application, and any riders constitute the entire contract, with no outside documents referenced.

• Common Disaster Provision: Ensures contingent beneficiaries receive proceeds if both the insured and primary beneficiary die in a common disaster, requiring the primary beneficiary to outlive the insured for benefits.

• Trust as Beneficiary: Naming a trust as a beneficiary allows management of proceeds for long-term benefit, with no unique tax advantages when compared to individual beneficiaries.

• Debt and Proceeds: A lump-sum payment from life insurance proceeds can be subject to the beneficiary's debts, whereas installment payments are protected from creditors during the trust period.

• Suicide Exclusion Clause: No new exclusion period applies upon reinstatement; death benefits are payable after a policy has been active for 2 years.

• Grace Period: Typically lasts 30 days, allowing for premium payment after the due date, not shorter.

• Assumptions Under Common Disaster Clause: Assumes the insured died last unless the primary beneficiary survives a specified time post-insured's death.

• Replacement Provision: This is not a mandatory provision in life insurance policies.

• Claims Payment Requirement: The insurer is obligated to process death benefits promptly, usually within 60 days.

• Exclusions Section: States the conditions under which the insured is not covered by the policy.

• Cash Value Accumulation: Policy owners can take loans based on the cash value of permanent insurance policies.

• Insuring Clause Signatory: An insuring agreement is typically signed by an authorized officer, not an agent.

• Absolute Assignment: Refers to the permanent transfer of ownership rights to another individual.

• Incontestability Period Standard: Generally set at 2 years for both individual and group life insurance policies.

• Insuring Clause Signature: Usually signed by an authorized officer of the insurance company, not by the insured.