Policy Provisions and Riders Flashcards

What is the 'misstatement of age' provision in a life insurance policy?

Answer: A provision that adjusts the death benefit to reflect what the premium would have purchased at the correct age

If the insured's age was misstated on the application, the death benefit is adjusted to the amount that the paid premiums would have purchased at the correct age.

What is the 'reinstatement' provision in a lapsed life insurance policy?

Answer: The right to restore a lapsed policy within a specified period by meeting certain conditions

The reinstatement provision allows a policyholder to restore a lapsed policy within a specified period by providing evidence of insurability and paying overdue premiums with interest.

What is the 'accelerated death benefit' (ADB) or 'living benefit' rider?

Answer: A rider that allows the policyholder to receive a portion of the death benefit while still alive if diagnosed with a terminal illness

The accelerated death benefit rider allows terminally ill policyholders to receive a portion of their death benefit in advance to help with medical expenses or other needs.

What is the 'spendthrift clause' in relation to life insurance beneficiary designations?

Answer: A clause that protects death benefit proceeds from the beneficiary's creditors

The spendthrift clause protects life insurance death benefit proceeds from being claimed by the beneficiary's creditors, ensuring the intended benefit reaches the beneficiary.

What is a 'child rider' on a life insurance policy?

Answer: A rider that provides term life insurance coverage on the insured's children

A child rider provides term life insurance coverage on the insured's dependent children, typically with a conversion privilege when the child reaches adulthood.

What is the 'entire contract' provision in a Canadian life insurance policy?

Answer: A provision stating that the policy document and attached application constitute the complete agreement

The entire contract provision states that the policy, together with the application attached to it, constitutes the complete agreement between the insurer and the policyholder.