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Riders are modifications to the insurance
policy added at the same time the policy is issued.
These
riders change the basic policy to provide some feature desired by
the policy owner. A common rider is accidental death, which used
to be commonly referred to as "double indemnity", which
pays twice the amount of the policy face value if death results
from accidental causes
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as if both a full coverage policy and an
accidental death policy were in effect on the insured. Another
common rider is premium waiver, which waives future premiums if
the insured becomes disabled.
Joint life insurance is either a term or permanent policy
insuring two or more lives with the proceeds payable on the first death.
Survivorship life or second-to-die life is a whole life
policy insuring two lives with the proceeds payable on the second
(later) death.
Single premium whole life is a policy with only one premium
which is payable at the time the policy is issued.
Modified whole life is a whole life policy that charges
smaller premiums for a specified period of time after which the premiums
increase for the remainder of the policy.
Group life insurance is term insurance covering a group
of people, usually employees of a company or members of a union or
association. Individual proof of insurability is not normally a
consideration in the underwriting. Rather, the underwriter considers the
size and turnover of the group, and the financial strength of the group.
Contract provisions will attempt to exclude the possibility of adverse
selection. Group life insurance often has a provision that a
member exiting the group has the right to buy individual insurance
coverage.
Life Insurance Products - Senior
And Preneed Products
Insurance companies have in recent years developed products to
offer to niche markets, most notably targeting the senior market
to address needs of an aging population. Many companies offer policies
tailored to the needs of senior applicants. These are often low to
moderate face value whole life insurance policies, to allow a
senior citizen purchasing insurance at an older issue age an opportunity
to buy affordable insurance. This may also be marketed as final
expense insurance, and an agent or company may suggest (but not
require) that the policy proceeds could be used for end-of-life
expenses.
Preneed (or prepaid) insurance policies are whole life
policies that, although available at any age, are usually offered to
older applicants as well. This type of insurance is designed
specifically to cover funeral expenses when the insured person dies. In
many cases, the applicant signs a prefunded funeral arrangement with a
funeral home at the time the policy is applied for. The death proceeds
are then guaranteed to be directed first to the funeral services
provider for payment of services rendered. Most contracts dictate that
any excess proceeds will go either to the insured's estate or a
designated beneficiary.
These products are sometimes assigned into a trust at the time of
issue, or shortly after issue. The policies are irrevocably assigned to
the trust, and the trust becomes the owner. Since a whole life policy
has a cash value component, and a loan provision, it may be considered
an asset; assigning the policy to a trust means that it can no longer be
considered an asset for that individual. This can impact an individual's
ability to qualify for Medicare or Medicaid.
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