Virginia Life: Life Insurance Policy Provisions, Riders, and Options (C-E)

Same face amount, shorter term of coverage

Extended term is the automatic nonforfeiture option:

Waiver of Premium, Waiver of Cost of Premium, Disability Income, Payor Benefit

Type of Rider: Disability Riders- Available Riders include:

insured's death or age 100

Settlement options are triggered by the ____

excess premiums, not taxable

Dividends are a return of _____, therefore, ______ when paid to the policy owner

Automatic Premium Loans

Prevents the unintentional lapse of a policy due to nonpayment of the premium.

15-25

Educational loans are limited to an age range of

Extended Term Option

Insurer uses the policy cash value to convert to term insurance for the same face amount as the former permanent policy.

Cash Surrender Value, Reduced Paid-Up Insurance, or Extended Term

Nonforfeiture options include:

Reduced Paid-up, Extended Term (Automatic), Cash

Option Type: Nonforfeiture Options- Available Options:

Cash (automatic), Life Income, Interest Only, Fixed Period, Fixed Amount

Option Type: Settlement Options- Available Options:

Accidental Death and Dismemberment Rider

Pays the principle (face amount) for accidental death, and pays a percentage of that or a capital sum for accidental dismemberment.

Reduced Paid-Up Insurance

Policy cash value is used by the insurer as a single premium to purchase a completely paid-up permanent policy that has a reduced face amount from that of the former policy.

Living Needs Rider

Provides for the payment of part of the policy death benefit if the insured is diagnosed with a terminal illness that will result in death within 2 years.

guaranteed insurability

Rider allows the insured to purchase additional coverage at specified future dates (every 3 years) or events (marriage or birth) without evidence of insurability for an additional premium.

Partial Withdrawal (Partial Surrender)

Universal life policies allow the ___ of the policy cash value (not the same as a policy loan)

loan value

Whenever a policy has cash value, it has

Disability Income Benefit

With this rider, in the event of disability the insurer will waive the policy premiums and pay a monthly income to the insured.

(unpaid loans+interest)

Loan = Cash value -

Spouse, Children, Family

Type of Rider: Riders Covering Additional Insureds- Available Riders include:

ONE premium for ALL children

Children's term rider =

Cannot guarantee

Insurance companies ____ dividends

6 months

Insurance companies may defer a policy loan request up to ____

Accidental Death, Guaranteed Insurability, Cost of Living, Return of Premium, Accelerated (Living) Benefit

Type of Rider: Riders Affecting Death Benefit- Available Riders Include:

Policy Loan

Found only in policies that contain cash value; owner is entitled to borrow an amount equal to the available cash value (whole life).

Waiver of Premium

Rider waives the premium for the policy if the insured becomes totally disabled; Coverage remains until insured is able to return to work; if unable to return premiums will continue to be waived.

Cannot outlive the benefit payments

Under life-income (straight life) settlement option, the recipient _____

Payable Death Benefit

? = Face amount - Amount withdrawn - Earnings lost by insurer in interest

Accidental Death Rider

Pays some multiple of the face amount if death is the result of an accident as defined in the policy; death must occur within 90 days of such an accident

Nonforfeiture, Dividend, and Settlement Options

Policyowners have decisions to make about how the cash value in the policy should be protected, how the return of excess premium should be invested, and how benefit payments will be made these policy options include:

Cash, Reduction of Premium, Accumulation at Interest, Paid-up Additions (automatic), Paid-up Insurance, One-year Term

Option Type: Dividend Options- Available Options:

Nonforfeiture Options

Because permanent life insurance policies have cash values, certain guarantees are built into the policy that CANNOT BE FORFEITED by policyowners; these guarantees are required by state law to be included in the policy.

Family term rider

incorporates the spouse term rider along with the children's term rider in a single rider

Waiver of cost of insurance

Rider is found in universal life insurance; in the event of disability of the insured, this rider waives the cost of the insurance and other expenses, but does not waive the cost of premiums necessary to accumulate cash values.

Return of Premium

Rider is implimented by using increasing term insurance; when added to a whole life policy, it provides that at death prior to a given age, not only is the original face amount payable, but an amount equal to all premiums previously paid is also payable to the beneficiary

premiums

Riders sometimes require an additional _____, but they also help tailor a policy to the specific needs of the insured