Options

Which nonforfeiture option is the "automatic" option?

If the policyowner cannot be reached, premium payments have ceased, and the policy's cash value is eliminated, the insurer will automatically use the extended term option. The correct answer is: Extended term option

Which of the following is a guarantee that is required by law to be a part of life insurance polices that build cash value?

Nonforfeiture options/values are guarantees that are required by law to be part of life insurance policies that build cash value The correct answer is: Nonforfeiture option

Which of the following nonforfeiture options does not allow the insured to reinstate the policy:

The extended term and reduced paid-up nonforfeiture options allow the policyowner to reinstate the original policy because coverage is still in effect. However, the cash surrender option does not allow the policy to be reinstated because the policy has been surrendered for its cash value, and no coverage remains. The correct answer is: Cash surrender

This dividend option provides additional permanent coverage:

The paid-up additions dividend option uses the dividend as a single premium to purchase paid-up whole life coverage. The correct answer is: Paid-up additions

Eddie wants to use a nonforfeiture option. Which of the following may Eddie not use?

Accumulation at interest is a dividend option. The correct answer is: Accumulation at interest

Which of the following is not a dividend option?

Reduced paid-up insurance is a nonforfeiture option. The correct answer is: Reduced paid-up insurance

What nonforfeiture option permits the policyowner to use the cash values to purchase paid-up term life insurance coverage?

The extended term option permits the policyowner to use the policy's cash values to buy paid-up term insurance. The correct answer is: Extended term

What nonforfeiture option allows the policyowner to purchase paid-up whole life coverage at a reduced face amount based on the policy's existing cash value?

The reduced paid-up insurance option allows the policyowner to purchase paid-up whole life coverage at a reduced face amount based on the amount of the policy cash value. The correct answer is: Reduced paid-up insurance

Which life insurance dividend option does not increase a policy's cash value?

With the cash payment dividend option, the policyholder is sent a check for the amount of the dividend, which does not increase the policy's cash value. The correct answer is: Cash payment

Rick is planning on getting married next month. He currently has a $100,000 whole life participating policy. Because he is planning a family, he wants to increase his life insurance while keeping his costs down. Which of the following options would best suit his needs?

Rick can use his dividends to purchase paid-up additions, without adding significantly to his costs. This option fulfills his need for increased coverage in the coming years as he starts his family. The correct answer is: Rick could use the dividends to purchase paid-up additions.