dividends
An insured receives an annual life insurance dividend check. What term best describes this arrangement?
Cash option
investment experience
invested premiums earn a higher return that was assumed
reduction of premium
The insurer uses the dividend to reduce the next year's premium
The paid-up addition option uses the dividend
To purchase a smaller amount of the same type of insurance as the original policy.
Paid-Up Additions
Additional single-premium Life insurance paid for by policy dividends and added to the face amount.
one year term
The insurance company uses the dividend to purchase additional insurance in the form of one-year term insurance that increases the overall policy death benefit.
Dividend Options
cash payment reduction or premium accumulation at interest one year term paid up additions paid up insurance
insurance companies cannot guarantee
dividends
mortality
fewer insured's die than were actuarially projected, so fewer death claims were paid
L&D insurance earned a higher return on their invested premiums than the expected to. they will use money to pay dividends on life insurance policies. this is called?
investment experience
Policy Dividends source
mortality investment experience operating expenses (loading)
an insured has a life insurance policy from a participating company and it received quarterly dividends. he has instructed the company to apply the policy dividends to increase the death benefit. the dividend option that the insured has chosen is called
paid up additions
dividends
return of higher premiums (not taxable)
interest earned on policy dividend
taxable
operating expenses (loading)
the cost of operating the company was less than assumed
cash payment
The insurer simply sends the policy owner a check for the amount of the dividend as it is declared usually annually.
accumulation at interest
the insurance company keeps the dividend in an account where it accumulates interest. the policyowner is allowed to withdrawal the dividends at any time. the amount of interest is specified in the policy and compounds annually. although the dividends themselves are not taxable, the interest on the dividends are taxable to the policyowner when credited to the policy, whether or not the policyowner receives the interest.