ACCUMULATION CLAUSE Meaning and
Definition
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An accumulation clause refers to a provision included in an insurance policy that allows a policyholder to add or accumulate the value of multiple policies or periods of coverage for the purpose of determining the total benefits or coverage amount. It is commonly found in life insurance policies, but can also be present in other types of insurance contracts.
The purpose of the accumulation clause is to give the policyholder the ability to increase the benefits or coverage amount over time without having to purchase an entirely new policy. It allows the policyholder to maintain a single policy while still enjoying the advantages of increased benefits or coverage.
Under an accumulation clause, the policyholder may be required to pay additional premiums in order to add or accumulate the value of multiple policies or coverage periods. The amount of additional premiums will depend on the terms and conditions specified in the insurance contract.
In case of a claim, the accumulated value of all the policies or coverage periods will be considered to determine the benefits payable to the policyholder or beneficiaries. This provision can be particularly beneficial in situations where the policyholder's needs have changed or increased over time and requires a higher level of coverage.
It is important for policyholders to review and understand the accumulation clause in their insurance policies to ensure they take advantage of any opportunities to increase their coverage as needed.
Etymology of ACCUMULATION CLAUSE
The word "accumulation" originates from the Latin word "accumulare", which means "to heap up" or "to pile up". It is derived from the prefix "ad-" (meaning "to") and the verb "cumulare" (meaning "to heap" or "to pile").
The word "clause" comes from the Latin word "clausula", which means "a closing" or "a clause", derived from the verb "claudere" meaning "to close" or "to shut".
When combined, the term "accumulation clause" refers to a specific provision or section in a legal or insurance agreement that allows for the gradual accumulation or build-up of something, typically assets, benefits, or insurance coverage.
