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Life Provisions & Options - Michigan Life Producer Exam
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Life Provisions & Options - Michigan Life Producer Exam
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Life Provisions & Options - MichiganLife Producer Exam
Entire Contract Provision - Answer -The application will be attached to the policy,
showing the insured statements. The insurance company can only challenge
statements made on the application in a claim situation. The insurance company can
only reference the policy when dealing with the insured.
The insurance company would not be allowed to reference the companies underwriting
handbook as a basis for denying a claim.
Nobody can change the policy, unless they are an executive officer.
Insuring Clause Provision - Answer -Contains the insurance companies promise to pay
claims in exchange for premium dollars, paid and statements on the application.
Incontestability Provision - Answer -After an insurance policy has been in effect for 2
years, company cannot claim that a statement in app was meant to defraud insurer.
Misstatement of Age or Gender Provision - Answer -Misstatement of age or gender on
an application will not void the contract. Insurance company will simply adjust the
benefits or premium.
Ownership Provision - Answer -The owner of the policy has all the rights of the policy.
Pick Beneficiaries, assign ownership to someone else, and make assignments of
benefits.
Free Look Provision / Right to Examine Provision - Answer -A policy provision required
by state law that establishes a set number of days (usually 10) from date of delivery to
the policyowner to review a newly issued policy. The policyowner may return the policy
to the insurer during this time for any reason and receive a 100% refund. Also known as
refund provision, unconditional refund provision, return provision, exchange provision,
or right to examine.
Loan Provisions - Answer -It allows an owner to borrow ONLY from the cash value and
is tax free, interest deducted for first year, and company has 6 months to process
request, insured is under no obligation to pay the loan back.
, If the amount amount of the loan plus accumulating interest exceeds the cash value, the
insurance company must give the insured a 30 day notice before the policy cancels.
Assignments - Answer -A policy can be assigned to someone else by the owner.
Collateral Assignment (I.E. Temporary, A Loan) - Answer -An assignment for life
insurance that assigns a debt to be paid if insured passes away. Debtor cannot make
profit from proceeds.
Payment of Premium Provision - Answer -Payment is to be paid before the policy goes
into effect.
Grace Period Provision - Answer -A period after premium is due to pay over due
premium without lapsing. 30 Days Grace Period.
Reinstatement Provision - Answer -If the insured lapses, they have the right to reinstate
the policy if they can prove insurability.
Backdating Provision - Answer -Companies are allowed to backdate a policy no more
than 6 months. (Beneficial to incentivize someone to purchase insurance at a lower age
rating.)
Suicide Provision (Optional Provision) - Answer -States that if the insured commits
suicide the insurance will act as if no policy was ever in force. Provision is limited to two
years. So if the insured commits suicide after two years then the policy would pay.
Time Limit on Lawsuits Provision - Answer -The insured is limited to six years after the
disputed event took place in order to seek legal remedy.
Aviation Provision - Answer -is a provision that excludes coverage for pilots, flight
attendants and military personnel. It would not apply to a fair pay passenger or even a
frequent flyer on a commercial plane.
Beneficiaries - Answer -people who are designated by the policyholder to receive the
death benefit of a life insurance policy
Beneficiaries (Per Stirpes Basis) - Answer -If a child has blood line then even if they
died their blood line would receive their share of the death benefit.
Beneficiaries (Per Capita Basis) - Answer -Child is the only one eligible to received
benefits and must be alive. If child beneficiary dies no-one gets benefit.
Revocable Beneficiary - Answer -has no rights under the policy and can be removed at
any time.
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