Unit 6: Life Insurance Policy Options

this nonforfeiture is when policyowner gets reduced amount of paid up whole life to buy single premium policy

Reduced paid-up insurance

What's the purpose of a settlement

Determine how the proceeds of the death benefit will be distributed to the beneficiaries

with this settlement option the insurance company pays the amount of principal and interest over certain period of time. If interest is greater than guaranteed rate the final payment will be larger

Fixed Period

with this settlement option the proceeds are paid out until they're gone. Recipient can increase/decrease payments. If more interest then length of payment period increases

Fixed amount

With this settlement option the insurance company pays the interest on the money at regular intervals and the death benefit is paid at a later date

Interest Income Only

with this settlement option pays as long as either beneficiary is alive (typically for a couple). after first beneficiary dies, the same or reduced payment is paid to the survivor.

Joint and survivor life

with this settlement option pays income for as long as beneficiary is alive. if beneficiary dies then balance is paid to another person in total or in installments

Life and refund certain

with this settlement option you're guaranteed to receive income the rest of your life. actual amount depends on death benefit and life expectancy of beneficiary. Beneficiary can take entire payout or share

Life income

with this settlement option the amount goes to beneficiary. Largest amount. Once they die no more money

Life income/straight life

with this settlement option it pays the income as long as the beneficiary is alive. Benericiary selects payment period (5, 10, 20 years) and payments guaranteed through then. Payment would continue to another person if beneficiary dies.

Life with period certain

What is Nonforfeiture

allows the insured to receive all/portion of benefits or partial refund on premiums paid if insured misses premium payments

This allows the policy holder to obtain the cash value accessible without having to surrender their policy

policy loan provision

this nonforfeiture is when the policy is canelled and policy owner receives current cash value

Cash Surrender

Dividend options: C A R P P O

Cash: policyowner gets check Accumulation at interest: divided left with insurer to earn interest (which will be taxed) Reduced Premium: divided can be applied and reduce next premium due Paid up Additions: uses each dividend to purchase additional amount of insurance Paid up Insurance: dividends plus the interest on them pays annual premium One year term insurance: dividend buys one year term insurance equal to policy's cash value

this nonforfeiture has net cash surrender value used to buy term insurance with the same death benefit as the original policy

extended term insurance

A partial surrender are allowed for what?

universal life