Insuring Clause ****
- Company's promise to pay
- Found on the cover of the policy
- Signatures of the President & Secretary of the insurance company
MR. WATSON: Let's talk about the insuring clause . What do you think is in the insuring clause?
WOMAN: Promise to pay.
MR. WATSON: Now, look. Where are we going to find the insuring clause?
WOMAN: First page.
MR. WATSON: On the cover of the policy, first page. It also stipulates that the insurance company receive "proof of death" in order to pay the beneficiary. A "death certificate". Does that make sense?
ALL: Yes.
MR. WATSON: So where are we going to find the insuring clause? First page. Stupid question, isn't it?
MR. WATSON: There are two signatures on every insuring clause. Whose do you think they are? The president and the secretary of the company.
Consideration Clause ***
- Amount & frequency (mode) of the premium
MR. WATSON: Consideration Clause . Remember the consideration on the part of the applicant? The completed application and the premium. The consideration clause spells out the amount and frequency of the premium payments.
Free Look ****
- begins at time of delivery
- full refund if requested
MR. WATSON: You have a 14-day free look . A 14-day free look, beginning from the time the policy is delivered. No questions asked, if the policy owner does not want the policy, the premiums paid are refunded. Annuities have 21 days. How many days?
ALL: Fourteen days for life insurance and 21 days for annuities.
MR. WATSON: I have ridden with insurance agents. They slam on the brakes at a red light, and all these policies come flying out from underneath the passenger's side and hit me in the heel. I said, "Holy smokes. This policy is nine months old." The guy's still covered, because the premiums have been coming out of his checking account. I said, "Let's deliver this to that guy." Nine months later.
MR. WATSON: Now begins the 14-day free look. From what time? When I put the policy in his hands. If he doesn't want it they give him back all those nine months of premiums and take back all your commission.
ALL: Ooh.
Grace Period ***
- premium was due but not paid
- insured is covered during this period of time
- benefit would be paid, but the premiums owed would be subtracted from the benefit
MR. WATSON: Policies have a grace period . All policies have a grace period. The premium is due today. It's been in force. For ordinary policies you have one month but not less than 30 days of grace. One month but not less than 30 days. (Those aged 64 & older get an extra 21 days).
MR. WATSON: Industrial policies, which are paid-
ALL: Weekly.
MR. WATSON: -- you have four weeks. Does that make sense?
ALL: Yes.
MR. WATSON: One month but not less than 30 days. How many days does February have?
ALL: 28.
MR. WATSON: 28, so you would have 30 days. One month but not less than 30 days. So here, give me a month.
ALL: April.
MR. WATSON: The grace period gives you a period of time when the premium is due and if you haven't paid it, you are still covered. However, if you die during the grace period, they will subtract the premium owed.
