Policy Riders, Provisions, Options, and Exclusions
A flexible-premium policyowner pays the illustrated planned premium, but policy value later becomes insufficient for the monthly deduction. Which conclusion is most accurate?
Answer and explanation
Answer: C. A planned premium is not necessarily a guarantee that coverage will last for life. Under the Compact flexible-premium standard, monthly deductions continue until value is insufficient, after which the policy is subject to a grace period and may terminate if required funding is not restored.Source: Interstate Insurance Product Regulation Commission — Individual Flexible Premium Adjustable Life Insurance Policy Standards — Scope and § 3 > K. Grace Period
More policy riders, provisions, options, and exclusions questions
- An insured with an accidental death and dismemberment rider loses the sight of both eyes in a covered accident. What does the rider ordinarily provide?
- An insurer tries to add an aviation exclusion after issue even though no aviation risk was disclosed or identified during underwriting. How does that compare with the Compact standard?
- An insurer wants to rely on a company underwriting manual to deny a claim, although the manual was never attached to the policy. What does the entire contract provision mean for that argument?
- An owner adds a spouse term rider to a base whole life policy. How is coverage structured for the spouse?
- An owner creates a trust for minor children and names the trust as policy beneficiary. What is the trustee's relevant role after the insured's death?
- An owner names 'my children, per stirpes.' One child dies before the insured but leaves two children. What result is the designation intended to produce?
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