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contract and taxes (policy assignment (could be a gift (absolute…

- - - - owner must formally request reinstatement within a time frame (us. 5 yrs)
      - owner must present proof of the insured's insurability
      - owner must pay all back premiums owed plus interest. if univ. life, insurance protection and expense charges for period btwn lapse and reinstatement
      - any policy loan must be repaid or reinstated along with the policy
  - - - if suicide occurs within the time limit, the ins. co. usually refunds the premium payments paid by the policyowner
  - - - still need sufficient cv to pay the premium due
- - - - must be between parties considered competent. people who have been declared legally insane may not enter into a valid contract. restrictions exist for minors.
    - - outstanding loans/cash withdrawals will be subtracted from the original face amount of the policy
      - death benefit can be paid in a lump sum or in the form of an income stream to the beneficiary (known as a settlement option)
      - payment of d.b. ends the contract
      - choices of payment method is available to the owner, but may also be available to the beneficiary
    - - no company, rules, oral understandings, or policyowner suppositions have any bearing on the contract unless they are included in the policy or the attached application
      - the entire contract provision also states that any changes in the policy terms can only be made by certain insurance company officials and must be agreed to in writing by the policyowner before teh changes can take effect
        
        agent is never authorized to make a change in a policy, even at the request of the policyowner
    - - for universal, grace period generally begins when not enough cv to keep the coverage in force
      - if insured doesn't die during the grace period and the premium is not paid by the end of the grace period, then the policy is said to lapse
  - - - owner can receive cash accum. as cash, or its equivalent. exception to full cv is that if the owner borrowed money on a policy loan, then the amount yet to be repaid plus interest will be deducted from the cash surrender value.
    - - policyowner uses the cv of a present policy as a single premium to purchase paid up insurance, at attained age rates, for a reduced face amount
        
        once the face amount has been determined, it remains the same for the duration of the contract, and the new policy will build cash values for the policyowner.
        
        no further premiums need to be paid on the reduced policy
    - - a policyowner generally has a 31 day grace period after the due date of the premium to make the payment
        
        after the grace period, the extended term option would go into effect unless some other option has been selected - if the policy has a cash value with which to purchase paid-up term insurance
        
        when a policy does lapse, the past-due premium does not constitute a debt against the existing cash values in a policy
- - - - limited amount of premium and required at least a minimum amount of pure risk coverage to qualify.