Policy Provisions, Riders, and Options
Domain 6 tests the standard clauses that decide whether a claim is paid, and the options available during the policy's life.
Key provisions
- Grace period: 15 days for monthly mode and 30 days for other modes. A premium paid within grace keeps the policy in force.
- Revival: a lapsed policy can be revived, usually within five years, on evidence of health and payment of arrears and interest.
- Suicide clause: death by suicide within 12 months of inception or revival is excluded; the policy may refund premiums as stated.
- Free look: 15 days (30 for distance marketing) to return the policy.
- Nomination: names a person to receive the claim money; the nominee is not the owner.
- Assignment: transfers the rights of the policy to another person.
- Surrender and paid-up: surrender ends the policy for a cash value; paid-up keeps a reduced cover without further premiums.
Worked example
A premium due on 1 January is paid on 20 January. The insured dies on 10 January. The policy was within the 30-day grace period, so the death claim is payable after deducting the unpaid premium.
Traps
Calling a lapsed policy cancelled; treating the nominee as the absolute owner; assuming a rider continues after the base policy lapses; mixing assignment with nomination.