A "contract in force" clause specifies the period during which a contract is active and the terms are legally binding for both parties involved. It generally outlines the start and end dates of the agreement and conditions under which it remains valid or can be terminated.
A 61-day Grace Period begins on the day we mail notice of the Premium required to keep this Contract in force.
The Premium required to keep this Contract in force will be an amount equal to the lesser of: (1) the amount by which X + Y + Z is greater than the accumulated Premiums paid as of the Monthly Anniversary Date on which the Grace Period began; and (2) an amount sufficient to provide a Cash Surrender Value equal to three Monthly Deductions.
A 61-day Grace Period will begin on the day we mail notice of the Premium required to keep this Contract in force. You must pay a total Premium sufficient to provide a Cash Surrender Value equal to the next three Monthly Deductions during the Grace Period to keep this Contract in force.
Effect of Insufficient Premium Levels. While these above premium levels will prevent policy lapse, paying only this level premium required may forego advantages of building up significant contract value. Premium payments less than those described above will not further erode the build-up of contract value, but will mean the future premium required to keep the contract in force must be sufficient to maintain a positive cash surrender value. This premium could be significantly higher or lower than the premium required to keep the contract in force during the guaranteed payment period or under the guaranteed minimum death benefit option.
•The Single No-Lapse Premium is a premium that, if paid on the Contract Date, will keep the Contract in force at least until the younger insured's Attained Age 91, regardless of investment performance and assuming no loans, withdrawals, or Contract changes.
•The Modal No-Lapse Premiums are premiums that, if paid on the Contract Date and each modal date up to the younger insured’s Attained Age 91, will keep the Contract in force at least until the younger insured's Attained Age 91, regardless of investment performance and assuming no loans, withdrawals, or Contract changes..
If the Contract subsequently enters default, we will tell you the amount you need to pay to keep the Contract in force, and when you will need to pay that amount. It’s important to know that these additional payment amounts could be substantial. For more information please refer to the LIMITED NO-LAPSE GUARANTEE and PREMIUMS sections and the Lapse Protection Rider subsection in the prospectus.
Should this happen, we will send you a notice of default setting forth the payment which we estimate will keep the Contract in force for three months from the date of default. A 61-day grace period will begin from the date the notice of default is mailed. Your payment must be received or postmarked within the 61-day grace period or the Contract will end and have no value. To prevent your Contract from lapsing, your payment must be in Good Order when received at the Payment Office. A Contract that lapses with an outstanding Contract loan may have tax consequences. For more information please refer to the LAPSE AND REINSTATEMENT section in the prospectus.
Limited No-Lapse Guarantee Premium – Premium that, if paid at the beginning of each Contract Year, will keep the Contract in force during the first 10 Contract Years, regardless of investment performance and assuming no loans or withdrawals.
As a Contract Owner, you may be able to obtain extra fixed benefits, which may require additional charges. These optional insurance benefits are described in what is known as a “rider” to the Contract. Riders are generally only available at Contract issuance, unless noted otherwise. Some riders may depend on the performance of the Contract Fund. Rider benefits will no longer be available if the Contract lapses and most rider benefits will no longer be available if you choose to keep the Contract in force under the Overloan Protection Rider. Some riders are not available in conjunction with other riders and other restrictions may apply. Investment options will be restricted if certain riders are exercised. For more information on optional benefits under the Contract, please refer to the RIDERS section of the prospectus.
If permitted by the insurance laws of the state in which the Contract is issued, a rider to the Contract is available, referred to herein as the "key person" rider, that allows the owner the option to continue the Contract in force on the life of a different Insured, subject to certain conditions. This rider is primarily offered to corporate and non‑corporate employers who own or may purchase a Contract issued on the life of a key employee. The rider may be included at the time the original Contract is issued or added after issue. If the Contract includes this rider, the Contract Owner will be able to continue the Contract in force on the life of a different key employee. Thus, the rider provides employers with a way to purchase the Contract on the life of a key employee that may continue in force in an appropriately modified form on the life of a new employee when the original Insured leaves the Contract Owner's employment. The revised Contract will have a new scheduled premium and certain other revised specifications, which will be set forth in a new Contract document. A Contract Owner's exercise of the option provided by the key person rider could be viewed as an exchange of the existing Contract for a new contract. The Contract prior to the Contract Owner's exercise of the option to change Insureds will be referred to as the "original Contract". The Contract in force after the exchange is effected will be referred to as the "new Contract."
In addition to excluding life insurance Death Benefits from the Beneficiary’s gross income, the Internal Revenue Code also defers taxation on the income portion of the Accumulated Value, prior to receipt by the Contract Owner. To qualify for this treatment, federal tax law may limit the premiums you may pay and requires that the Accumulated Value be limited to a certain percentage of the Death Benefit. We will return the portion of any premium payment that causes the limit on premiums to be exceeded, unless the premium is required to keep the Contract in force.
Limited No-Lapse Guarantee Premiums – Premiums that, if paid at the beginning of each Contract Year, will keep the Contract in force during the first five Contract Years, regardless of investment performance and assuming no loans or withdrawals.
Planned premiums may be paid at twelve, six, or three-month intervals. They may also be paid monthly with our consent. In order to keep the contract in force, the premium you pay must be sufficient to prevent the contract from lapsing as described in Section 5.8, Grace Period and Contract Lapse.
Your variable universal life insurance contract provides for flexible premium payments and an adjustable death benefit. The Contract Values are affected by such things as the investment experience of the Subaccounts, the amount of your premium payments, monthly contract charges, and the monthly interest credited to your Fixed Account Value. Even if planned premiums are paid as scheduled, they may not be sufficient to continue the contract in force until the death of the Insured.
Some aspects of your variable universal life insurance contract are guaranteed, including the minimum Fixed Account Guaranteed Interest Rate and maximum Cost of Insurance charges. Other aspects of your contract, such as the investment experience of the Subaccounts, the current interest rate on the Fixed Account, and current Cost of Insurance charges, are not guaranteed. Fluctuations in the non-guaranteed elements of your contract will affect the Contract Values and premium payments necessary to keep your contract in force. Contract loans and partial surrenders may adversely affect the amount of death benefit, Contract Values, and premium payments necessary to keep your contract in force.
You may pay later premiums at any time. However, no premium payments will be accepted by us after the Insured attains age 121, except for amounts necessary to keep the contract in force under Section 5.8, Grace Period and Contract Lapse.
We will not limit premiums to less than the amount necessary to keep the contract in force under Section 5.8, Grace Period and Contract Lapse.
Planned premiums may be paid at twelve, six, or three-month intervals. They may also be paid monthly with our consent. In order to keep the contract in force, the premium you pay must be sufficient to prevent the contract from lapsing as described in Section 5.8, Grace Period and Contract Lapse.
Increase in Current Fees and Expenses. Certain insurance charges are currently assessed at less than their maximum levels. We may increase these current charges in the future up to the guaranteed maximum levels, based on changes in the Company’s future expectations of relevant factors, as determined in its sole discretion. Although some Portfolios may have expense limitation agreements, the operating expenses of the Portfolios are not guaranteed and may increase or decrease over time. If fees and expenses are increased, you may need to increase the amount and/or frequency of premium payments to keep the Contract in force.
A Contract in Force refers to a legal agreement that is currently active and has not expired, been terminated, or otherwise invalidated. This term indicates that all parties involved are still bound by the terms of the contract, which remain enforceable under the law. A contract typically comes into force upon the occurrence of specified conditions or the execution of agreement signatures, and it remains active until it is duly terminated, either by fulfillment or breach.
You should use the term Contract in Force when discussing agreements that are currently operational and require compliance by all parties involved. It is critical in various business contexts where ongoing obligations, rights, or services are involved. This includes:
When drafting a Contract in Force, it is essential to specify the effective date of the contract and outline the conditions under which the contract becomes active. Additionally, the document should clearly present:
Example: “This Agreement shall come into force on the date it is signed by all Parties and shall remain in effect until terminated as per the terms laid out herein.”
Various types of contracts can be described as Contracts in Force, especially those with ongoing obligations or long-term implications. These include:
These contracts often specify the conditions for coming into force, ensuring all parties understand when and how the agreement applies.
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Dive deeper into the world of clauses and learn more about these other clauses that are used in real contracts.
Contract modification refers to the agreed-upon changes made to the terms or conditions of an existing contract by all involved parties. These modifications require mutual consent and can address various aspects, such as scope, pricing, or timelines, ensuring the contract remains relevant and effective.
A "Contract Year" is a defined term referring to a consecutive 12-month period starting on a specified date, often the effective date of a contract, and repeating annually throughout the contract's duration. It is used to structure time-based obligations, such as payments, performance milestones, or renewals, within the agreement.
The "Control of Property" clause delineates the rights and responsibilities related to the use, management, and disposition of property involved in a contract. It specifies how property is to be handled, ensuring that parties comply with agreed terms and maintain accountability throughout the contractual relationship.
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