Lesson 3: Life Insurance Riders and Provisions
Common Riders:
- Accidental Death: Extra payout if death is accidental.
- Waiver of Premium: Waives premiums if policyowner becomes disabled.
- Guaranteed Insurability: Buy more insurance later without proof of health.
- Child Rider: Covers children under parent's policy.
- Accelerated Death Benefit: Access part of death benefit if terminally ill.
Policy Provisions:
- Entire Contract: Policy + application + riders = full agreement.
- Incontestability: Insurer can’t dispute policy after 2 years (except fraud).
- Grace Period: Usually 31 days to pay premium before lapse.
- Reinstatement: Reactivate lapsed policy by paying back premiums + interest.
- Misstatement of Age: Adjusts benefit based on correct age.
Texas-Specific Notes:
- Texas requires insurers to explain riders clearly.
- Accelerated benefits must be clearly labeled and explained at time of purchase.
Flashcards
What does the Accidental Death rider do?
Provides extra payout if death is accidental.
What is the Waiver of Premium rider?
Waives premiums if policyowner becomes disabled.
What does the Guaranteed Insurability rider allow?
Buy more insurance later without proof of health.
What is the purpose of the Child Rider?
Covers children under parent's policy.
What is the Accelerated Death Benefit rider?
Access part of death benefit if terminally ill.
What does the Entire Contract provision include?
Policy + application + riders = full agreement.
What is the Incontestability provision?
Insurer can’t dispute policy after 2 years (except fraud).
What is the Grace Period in a life insurance policy?
Usually 31 days to pay premium before lapse.
What does the Reinstatement provision allow?
Reactivate lapsed policy by paying back premiums + interest.
What does Texas require about riders in life insurance policies?
Insurers must explain riders clearly.