LIFE INSURANCE CONTRACTUAL PROVISIONS CHANGE OF PLAN – provide flexibility to exchange their

OWNERSHIP CLAUSE –the right includes naming and policy to different contracts
changing beneficiary, surrendering policy for its cash value, EXCLUSION AND LIMITATIONS
borrowing cash, receiving dividends and electing settlement  SUICIDE – usually 2 yrs
options  WAR CLAUSE
ENTIRE CONTRACT CLAUSE – protects the ensured, - STATUS CLAUSE – the face amount of
beneficiary and the insurer insurance is not paid if the insured dies while
INCONTESTABLE CLAUSE – if the insured is dead, he or she in the military, regardless of the cause
cannot refute the insurer’s allegation - RESULT CLAUSE – the face amount is not
SUICIDE CLAUSE – there is a presumption against suicide paid if the death is a direct result of war
because death s unintentional act because of strong self-  AVIATION EXCLUSION – exclude aviation death
preservation  CERTAIN HOBBIES – auto racing, skydiving,
GRACE PERIOD- the policy enters the grace period when the scuba diving, hang gliding and travel residence
grace period when the cash-surrender value on the monthly PAYMENT OF PREMIUMS – policy holder must pay a carrying
anniversary date is not sufficient to pay the monthly deductions charge
REINSTATEMENT CLAUSE – acquisition expense incurred in
issuing the policy must be paid again if a new policy is
purchased, in incontestable period and suicide clause may
have expired.
Major disadvantage of reinstating lapse policy is that a
substantial cash outlay is required if the policy lapsed several
years earlier, new policy may provide greater flexibility in the
payment of premium
BENEFECIARY DESIGNATION – there will be legal problem
when minor children are named as beneficiary because they
lack legal capacity