In addition to the many required legal provisions of a life insurance contract, many life insurance contracts include special provisions, permit special endorsements, and/or allow special riders to be attached to the basic contract. The purpose of these provisions and riders often is to enhance the flexibility and fit of the policy to the policyowner’s needs. However, in some cases, they serve to restrict the policyowner’s options and to limit the insurer’s exposure. Also, some of the standard policy provisions, such as the dividend provision, the nonforfeiture provision, the policy-loan provisions, and the settlement provisions, usually include default options that policyowners may request the insurer to replace with other options. However, the options are not uniform among contracts; some companies offer a more restrictive list of choices than others or include other limiting features or provisions.
To select the policy or insurance package with the most favorable combination of features one must know not only the options available but also something about how those options may differ among companies and contracts.
The policy provisions and riders discussed in this chapter include:
- term riders;
- limitation riders;
- cost-of-living riders;
- accidental death benefit riders;
- disability waiver of premium riders;
- disability waiver of policy charges riders;
- disability income riders;
- additional purchase options (guaranteed insurability riders);
- accelerated death benefit riders;
- catastrophic illness riders;
- long-term care riders;
- extension of benefits riders;
- high early cash value riders;
- automatic premium loan provisions;
- policy loan interest rate;
- dividend options;
- bailout provisions;
- change of plan provisions;
- change of insured provisions;
- additional insured riders;
- common accident provision (survivorship clause); and
- settlement options.
Reproduced with permission. Copyright The National Underwriter Co. Division of ALM