ExamFX
An insured pays $1200 annually for her life insurance premium. The insured applies this year's $300 worth of accumulated dividends to the next year's premium, thus reducing it to $900. What option does this describe?
Reduction of premium
What limits the amount that a policyowner may borrow from a whole life insurance policy?
Cash value
An insured owns a $50000 whole life policy. At 47, the insured decides to cancel his policy and exercise the extended term option for the policy's cash value, which is at $20,000. What would he the face amount of the new term policy?
$50,000- the face of the term policy would be the same as the face amount provided under the whole life policy
What happens when a policy is surrendered for its cash value?
Coverage ends and the policy cannot be reinstated
If an insured under a variable life insurance policy dies, how will the insurer respond to outstanding policy loans?
The loan amounts are deducted from the death benefit
The automatic premium loan provision is activated at the end of the
Grace period
What would be an advantage to naming a contingent (or secondary) beneficiary in a life insurance policy?
It determines who receives policy benefits if the primary beneficiary is deceased.
A fee charge to the insured when a policy or annuity is exchanged for its cash value is
Surrender charge
Which nonforfeiture option has the highest amount of insurance protection?
Extended term