Life Policy Options

An insurance customer calls to inform you that he does not want to continue making premium payments on his $250,000 Whole Life Policy. After reviewing his options, he decides to use his cash value to purchase the extended term nonforfeiture option. What will be the face value of the term policy?

$250,000

When a participating policy is purchased, the policyowner must decide how to receive the policy dividends. All of the following are dividend options EXCEPT:

Purchase of Paid-Up Term Insurance

Nonforfeiture values refer to the surrender of a policy's cash values. Which of the following options is NOT a life insurance nonforfeiture value?

Paid-up additions

Sammy purchases a $50,000 participating whole life policy. He has a need for more life insurance , however, he does not think he can afford it. Of the following dividend option, which would help to solve this problem automatically?

Using dividends to buy paid-up additions

All of the following are typical life insurance dividend options EXCEPT:

Using the dividends to increase the policy's face amount

Mitchell owns a participating whole life insurance policy with a $200,000 face amount. If he chose to receive policy dividends under the paid-up additions option, which of the following statements is INCORRECT?

Dividend will be used to purchase paid-up term life insurance.

With the interest only option, the insurance company retains the death proceeds and invests them for the beneficiary. What happens if the beneficiary dies while the money is still with the insurer?

It will be paid to a contingent beneficiary named in the original policy, or if no contingent beneficiary, paid to the primary beneficiary's estate.

Antonio is the primary beneficiary of a life insurance policy. He dies after receiving $500 per month for 5 years under a 10-year period certain income option. His son, Rodney, is the contingent beneficiary. Which of the following statements relating to this situation is CORRECT?

Rodney will receive income payments for $500 each month, for 5 years.

All of the following are dividend options EXCEPT:

assigning dividends to pay off a loan.

Whole Life policies that have lapsed can be reinstated under the reinstatement provision of the contract. What nonforfeiture option(s) can reinstatement also take place under?

Both reduced-paid up and extended term options

Which of the following statements is CORRECT regarding policy dividends?

Dividends result from favorable operating of investment income.

Death benefits can be paid to the beneficiary in a variety of different payment arrangements or settlement options. All of the settlement options pay the beneficiary both principal and interest EXCEPT:

Lump-sum option

The total amount of dividends companies declare will vary each year. Dividends are impacted by all of the following EXCEPT:

Policyholders dividend elections