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