Policy Options

One-year term (Dividend Options (OCRAP)

Company uses the dividend to purchase additional insurance in the form of *one-year term insurance that increases the overall policy death benefit*

Fixed Period (Settlement Option (CLIFF)

Deplete funds over a fixed period

Paid-up Additions (Dividend Options (OCRAP)

Dividends are used to purchase a single premium policy in addition to the face amount of the permanent policy.

Fixed Amount (Settlement Option (CLIFF)

Fixed amount until proceeds are exhausted

Accumulation at Interest (Dividend Options (OCRAP)

Insurance company keeps the dividend in an account where it accumulates interest

Reduction of Premium (Dividend Options (OCRAP)

Insurer used the dividend to reduce next year's premium

Cash (Non-forfeiture Options (REC)

Interest taxable, surrender charge (decreases over time)

Cash Loans (Policy Loans/Withdrawal Options)

Loans are not subject to income tax

Cash Payment (Lump Sum) (Settlement Option (CLIFF)

Not taxable to beneficiary

Life Income (Settlement Option (CLIFF)

Pays guaranteed installments as long as the recipient lives. Principal is forfeited upon death. Principal is made up of principal and interest; interest is taxable.

Automatic Premium Loan (Policy Loans/Withdrawal Options)

Prevents the policy from lapse due to nonpayment of premiums

Reduced Paid-up (Non-forfeiture Options (REC)

Reduced face amount

Dividend Options (OCRAP)

Return of excess premiums, non-taxable and non-guaranteed.

Extended Term (Non-forfeiture Options (REC)

Same face amount/ turns into term policy

Interest Only (Settlement Option (CLIFF)

Temporary option, until proceeds are paid. Interest is taxable

Cash Option (Dividend Options (OCRAP)

The insurer sends the policy owner a check for the amount of the dividend as it is declared; usually annually.

Withdrawal or Partial Surrender (Policy Loans/Withdrawal Options)

Universal life insurance products only, surrender charge applies on withdrawals, & could be taxed