Term
| What is the Free Look Provision |
|
Definition
| This is like a free examination provision in that it gives the policyowner a stated period of time - usually ten days - to look it over. Ins. is in effect during this time - but if they decide they do not want it, they can get a full refund. |
|
|
Term
| There are two types of contracts under the Entire Contract Provision - these are closed contract and open contract - how do these differ? |
|
Definition
| A closed contract include all terms and conditions attached to the policy whereas an open contract does not have to have all terms and conditions attached. With the exception of the fraternal insurers, all life insurance policies in the U.S. are closed contracts. |
|
|
Term
| There are Incontestability Provisions. What are the differences between Material Misrepresentation and Fraudulent Misrepresentaion? |
|
Definition
| A misrepresentation that would affect the insurance company's evaluation of the proposed insured is called Material Misrepresentation. The insurer has the right to avoid the contract. A fraudulent misrepresentation was when a person intentionally deceives in order to get a contract. It is difficult for the insurer to prove so they seldom exercise their right to avoid the contract. |
|
|
Term
| What are the differences between WARRANTY - REPRESENTATION - and MISREPRESENTATION? |
|
Definition
| Warranty is a statement that will invalidate the contract if the statement is not literally true. In contract, Representation is a statement that will invalidate the contract if the statement is not substantially true. A Misrepresentation is a false or misleading statement in an application. For life insurance policies, statements are representations and not warranties. |
|
|
Term
| Grace Period Provision specified a length of time following each renewal premium date within which the premium may be paid without loss of coverage - what is that time and when is a policy considered lapsed? |
|
Definition
| The grace period is usually 30-31 days and it is considered lapsed when the renewal premium is not paid by the end of the grace period. |
|
|
Term
| Life Insurance Policies typically include a Reinstatement Provision - what is the process to reinstate a policy? |
|
Definition
| To reinstate a policy and put it back in force after it was terminated because of nonpayment of renewal premiums or been continued under the extended term - the insured must submit an application, submit evidence of insurability, pay a specified amt. of money and pay outstanding policy loans. It the policy had been surrendered for cash surrender value - it cannot be reinstated. |
|
|
Term
| Does a new contestable period begin when it is reinstated? |
|
Definition
| It does - it begins on the date on which the policy is reinstated. |
|
|
Term
| What is a Policy Loan Provision? |
|
Definition
| This grants the owner of the policy to take out a loan for an amount that does not exceed the policy's cash value less one year's interest on the loan. It differs from a commercial loan in that the policyowner is not legally obligated to repay a policy loan and it does not perform a credit check. |
|
|
Term
| What is the difference between a NONFORFEITURE PROVISION AND AN AUTOMATIC NONFORFEITURE BENEFIT? |
|
Definition
A Nonforfeiture provision sets forth options available to the owner of a cash value policy if that policy lapses, terminates or the insured surrenders the policy.
An Automatic Nonforfeiture benefit becomes effective automatically when a renewal premium for a cash value life ins. policy is not paid by the end of the grace period. |
|
|
Term
| What should be known in regard to Suicide Exclusion Provisions? |
|
Definition
| If the insured's death occurs during the two-year exclusion period, the insurance co. is not liable to pay the death benefit. The insurer will return the premiums paid for the policy less the amt. of any unpaid policy loans. |
|
|
