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ears at same contractual rates as the policy - dividends can be withdrawn at any time - if die added to the face value - interest on is taxable income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