Life Insurance Policy Provisions, Options and Riders- I. Settlement Options
Fixed-period installments (aka period certain)
-a specified period of years is selected, and equal installments are paid to the recipient. -the payments will continue for the specified period even if the recipient dies before the end of that period. -the size of each installment is determined by the amount of principle, guaranteed interest, and the length of period selected. -this option does not guarantee income for the life of the beneficiary -it does guarantee that the entire principle will be distributed.
Single life
-can provide a single beneficiary income for the rest of his/her life. Upon death of beneficiary, the payments stops.
Life refund income
-comes in either a cash refund form or an installment refund form. -both guarantee that the total annuity fund will be paid out to the annuitant or to the beneficiary.
Life income joint and survivor
-guarantees an income for two or more recipients for as long as they live. -most contracts provide that the surviving recipient will receive a reduced payment after the first recipient dies. joint and 1/2 or 2/3 survivor.
Installment refund option
-the beneficiary would receive the remaining funds in the form of continued annuity payment
Life with period certain option
-the recipient is provided with the "best of both worlds" in terms of a lifetime income and a guaranteed installment period. -Not only are the payments guaranteed for the lifetime of the recipient, but there is also a specified period that is guaranteed. -ex. life income w/10 year certain option-it would provide the recipient with an income as long as he/she lives. if he/she dies, the payments will be continued to a beneficiary for the remainder of the 10-yr period.
Cash payment
-upon insured's death, a lump sum cash is paid out to the beneficiary -Death benefit is not taxable as income
Settlement options:
1. Cash payment 2.Life Income 3. Interest only 4. Fixed-period installments 5. Fixed-amount installments
Fixed-amount installments
-pays a fixed, specified amount if installments until the proceeds (principal and interest) are exhausted.-if beneficiary dies and still funds left, it'll go to contingent beneficiary -does not guarantee income for the life of the beneficiary
Life Income Option aka Straight life
-provides the recipient with an income that he or she cannot outlive, guaranteed for as long as the recipient lives -installment amounts are based on recipient's life expectancy and the amount of principle -should the recipient live a short life, the balance of principle is forfeited
Interest Only Option
-the insurance company retains the policy proceeds and pays interest on the proceeds to the recipient (beneficiary) at regular intervals. -it is a temporary option until the recipient decides which settle option to select.
Settlement Options
-are methods used to pay the death benefits to a beneficiary upon the insured's death or to pay endowment benefit -Policy owned may select it at the time of application and may change it any time. -Beneficiaries cannot select it, unless it wasn't selected by the policy owner then he/she can upon insured's death. -
Cash refund option
-if the annuitant dies before the annuity fund is depleted, a lump sum settlement of the remainder would be made to the beneficiary.
Income-Life Options include
1.Single life 2.Life income joint and survivor 3. Life refund 4. Life with period certain
