CP-#2-Describe provisions

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School
University of Phoenix **We aren't endorsed by this school
Course
FINANCE FIN 420
Subject
Finance
Date
Oct 16, 2023
Pages
1
Uploaded by ChiefFangSparrow36 on coursehero.com
Describe the provisions of life insurance policies. - Policy provisions are details in insurance policies that explain coverage periods, what the policy excludes, start dates and other exclusions and restrictions. It also details what the policy covers and for how much. Policy provisions also detail the rights and responsibilities of the policy holder, the insurer, and beneficiaries. They serve as rules that everyone attached to the policy must follow throughout the policies term. Provisions include premium payments, death benefits, policy loans, and more. The insurer is the one who underwrites the policy and promises to pay out the death benefit when the insured passes on. The insured is the one whose life is insured under the policy. Sometimes the policy can be written for more than one person often used for estate planning. The owner is the one who is insured but sometimes doesn't have to be. They have rights in the policy including the right to surrender the policy, borrow from it, make changes, and even assign ownership to someone else. The beneficiary is the one who receives the death benefit once the insured passes on. The first beneficiary listed is the one who receives their benefit first. Sometimes there is a contingent beneficiary who often gets the benefit if the first beneficiary is deceased. The owner of the policy can designate as many beneficiaries and contingent beneficiaries as they would like. There are also other provisions such as free look provision which gives the insured a period to cancel the policy after they have signed all documents and paid their premium. Grace period gives the insured/policy holder more time to pay their premium before its due. Suicide clause most insurers won't cover death by suicide that happens within the first two years of the policy. Incontestable clause makes the policy incontestable by the insurer after the policy has been active for two years but there are often exceptions. Reinstatement provision allows a policy owner to reinstate their coverage under a policy that has lapsed due to non-payment of premiums. Policy loan provision is the ability to borrow from the policy. Settlement options provision details different options for pay out of the death benefit to beneficiaries. Accelerated benefit provision allows early withdrawal of death benefits if the insured becomes fatally sick. War clause provision, the insured may include this provision but it will not cover a death if its caused by acts of war.
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