Nonforfeiture and Settlement Options
When the policyowner specifies a dollar amount in which installments are to be paid, he/she has chosen which settlement option? A. Life income period certain B. Extended term C. Fixed amount D. Fixed period
C. Fixed amount
Which nonforfeiture option provides coverage for the longest period of time? A. Paid-up option B. Accumulated at interest C. Reduced paid-up D. Extended term
C. Reduced paid-up
When the insured selects the extended term nonforfeiture option, the cash value will be used to purchase term insurance with what face amount? A. Equal to the original policy for as long as the cash values will purchase B. In lesser amounts for the remaining policy term of age 100 C. Equal to cash value surrendered from the policy D. the same as the original policy minus the cash value
A. Equal to the original policy for as long as the cash values will purchase
If a beneficiary wants a guarantee that benefits paid from principal and interest would be paid for a period of 10 years before being exhausted, what settlement option should the beneficiary select? A. Fixed period B. Life with period certain C. Fixed amount D. Interest only
A. Fixed period
Which of the following determines the length of time that benefits will be received under the Fixed-Amount settlement option? A. Size of each installment B. Predetermined length of time stated in the contract C. Length of income period D. Amount of interest
A. Size of each installment
Which of the following best describes fixed-period settlement option? A. The death benefit must be paid out in a lump sum within a certain time period B. Income is guaranteed for the life of the beneficiary C. Both the principal and interest will be liquidated over a selected period of time D. Only the principal amount will be paid out within a specified period of time
C. Both the principal and interest will be liquidated over a selected period of time
Which is TRUE about the cash value surrender nonforfeiture option? A. The policy remains active for some time after the policyholder opts for cash surrender B. The policyholder receives the original cash value of the policy C. Funds exceeding the premium paid are taxable as ordinary income D. After the cash surrender, the insured is covered for a grace period of one month
C. Funds exceeding the premium paid are taxable as ordinary income
An insured has chosen joint and 2/3 survivor as the settlement option. What does this mean to the beneficiaries? A. The beneficiary will receive 2/3 of the total benefit, with the final 1/3 payable when the first beneficiary dies B. One of the beneficiaries will receive 1/3 and the other 2/3 of the proceeds when the insured dies C. The surviving beneficiary will continue receiving 2/3 of the benefit paid when both beneficiaries were alive D. The beneficiary will receive 2/3 of the lump sum up front, and the remaining 1/3 will be paid over time
C. The surviving beneficiary will continue receiving 2/3 of the benefit paid when both beneficiaries were alive
What is the benefit of choosing extended term as a nonforfeiture option? A. It allows for coverage to continue beyond maturity date B. It can be converted to a fixed annuity C. It has the highest amount of insurance protection D. It matures at age 100
C. It has the highest amount of insurance protection
What is the other term for the cash payment settlement option? A. Face amount B. Proceeds C. Lump sum D. Principal amount
C. Lump sum
