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LIFE INSURANCE POLICY PROVISIONS, OPTIONS, RIDERS #1. Grace is the primary beneficiary of her grandfather's life insurance policy. Upon his death, she wants some income from the death benefit, but wants the face amount to be conserved. Which settlement option should she choose? On the "interest only" settlement option, Grace would receive the interest earned by the face amount, but the face amount would remain. The Extended Term nonforfeiture option has the same face amount as the original policy, but for a shorter period of time. Which nonforfeiture option has the highest amount of insurance protection? Extended Term If the applicant has misstated his or her age on the application, the insurer, in the event of a claim, is allowed under this provision to adjust the benefits to an amount that the premium at the correct age would have otherwise purchased. In this case, the coverage would have ceased when the insured reached the maximum age stated in the policy. Under which nonforfeiture option does the company pay the surrender value and have no further obligations to the policyowner? Cash surrender Once the cash surrender value is paid, the contract is over. The Other insureds rider is useful in providing insurance for more than one family member. The type of insurance offered by this rider is usually term insurance, with the right to convert to permanent insurance. The Reduction of Premium option allows the policyholder to apply policy dividends toward the next year's premium. The dividend is subtracted from the premium amount, yielding the new premium due for the next year. The amount available to the policyowner for a loan is the cash value minus any outstanding and unpaid policy loans, plus interest. What limits the amount that a policyowner may borrow from a whole life insurance policy? Cash value plus the loan interest Which of the following statements is true about a policy assignment? It transfers the owner's rights under the policy to the extent expressed in the assignment form. The policyowner may assign a part of the policy
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This note was uploaded on 11/22/2010 for the course PHY 724 taught by Professor Barnes during the Spring '10 term at El Centro College.

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