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Actual Sample Life Insurance Case A man purchased a life insurance policy and paid the premiums on a monthly basis. He got into financial difficulty, became depressed, stopped paying his premiums, and eventually committed suicide. His beneficiary filed a claim which the insurance company denied on the basis of failure to pay premiums. The law requires notice be given before a life insurance policy is cancelled. The insurance company couldn't prove it provided the required notice, so it paid the life insurance benefits plus interest. TermsAccelerated Benefit Provision
A provision which allows partial payment to the policyowner if he is diagnosed with a terminal illness or permanently confined to a nursing home.Accidental Death Benefit
An added provision which provides additional benefits if the insured dies from accidental causes.Face Amount
The amount of money due the beneficiary upon the insured's death.Grace Period
A period of time after nonpayment of the premium during which the premium may be paid without penalty. The policy remains in effect during the grace period. Lapse
Termination of the policy for failure to pay the premium.Loan Value
The amount which can be borrowed by the policyowner from the company using the value of the policy as collateral. Usually the interest rate payable on the loan varies based on an index defined in the policy.Nonforfeiture Benefit
A provision that the cash value of a policy will not be forfeited for failure to pay premiums, or if the policyowner surrenders the policy.Reinstatement
Bringing a lapsed or surrendered policy back into effect after the grace period. The insurance company generally requires proof of insurability and payment of all past premiums plus interest.Rider
An added provision which provides additional benefits.Surrender
Voluntary termination of a policy for its cash value.Waiver of Premium
A rider which allows the policyowner to stop paying premiums of he is disabled.
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