Life Insurance Settlement Options
interest only settlement option
"Proceeds left with insurer - Interst paid to beneficiary on installment basis - when policy owner wants to provide for contingent beneficiaries
Fixed Period settlement option
"liquidating benefit proceeds and interest over a fixed period of years - amount of of proceeds, the period of time, the guaranteed rate of interest, frequency of payments = installment
Dividends
A refund of premiums NOT a return on investment - comes from either operating margins or better performance over actuarial tables (i.e. less died than they thought)
Fixed Amount Settlement Option
A specific amount liquidates proceeds and interest on specific intervals until exhausted - the amount is determining factor
Accelerated endowment
Accumulated until WITH the cash value equal the face at which time policy can be paid as an endowment - can also be used to shorten the endowment period
Reduced paid up insurance
Cash value is used to buy a single premium insurance contract - the value is obviously much less but there are no other premiums due
Extended Term Option
Default Option - Buys term insurance equal to the original face value and keeps it in force for as long as the cash value will buy
Sources of dividends
Mortality - Assumed Interest - Operating expenses (loading - cost of $1k of insurance)
Not Guaranteed Not Taxable
Obvious but again it is a refund so that is why there are no taxes
Participating vs. Non
Par gives dividends Non does not
Paid up option
Pay the policy early - a 20 yar pay can be paid in 16 years if using the dividends to do so
Cash Dividend Option
Policy owner gets a check (not taxed)
Paid-up Additions
Purchase of additional insurance that is added to the face value of the contract - paid in full and increases death benefit
One Year Term Option
Use dividends to purchase one year of term up to amount of cash value in policy
Non-forfeiture
basically meas you can vern give up the cash you have accumulated
Refund life income options
cash refund annuity or installment refund annuity
Accumulation at Interest Option
ears at same contractual rates as the policy - dividends can be withdrawn at any time - if die added to the face value - interest on is taxable income
Joint and survivorship life income option
if at death of first party second living party receives installments for lifetime
Cash Surrender Value
insurer has up to 6 months to pay but it is usually within 30 days - cannot be reinstated
Joint and two thrids
provides an income for two people: the full amount for the couple, while both are living, and two-thirds of the amount for the survivor
Life Income with Period Certain
provides installments as long as primary beneficiary is alive but on death before certain # of years pays secondary beneficiary until end of the period
Pure life income option
provides installments for as long as beneficiary lives with NO return of premiums (refund) guaranteed
Reduce Premium Option
use dividends to reduce the premium