Extended Term nonforfeiture option
Settlement Option. Under a settlement option, the maturity amount entitled to a life insurance policyholder is paid in structured periodic installments (up to a certain stipulated period of time post maturity) instead of a 'lump-sum' payout. Such a payout needs to be intimated to the insurer in advance by the insured.
Common Life Insurance Settlement Options
- Lump-Sum Payment. A lump-sum payment is perhaps the easiest to understand.
- Interest Only.
- Interest Accumulation.
- Fixed Period.
- Lifetime Income.
- Lifetime Income With Period Certain.
Permanent life insurance is the most likely option to provide a cash value component. Types of permanent life insurances include: Whole life insurance. Universal life insurance (and subtypes including indexed and variable)
Which Nonforfeiture Option Continues to Build up Cash Value? The reduce paid-up option will continue to build up cash value. It will do this through the accumulation of guaranteed interest and (if applicable) the payment of dividends assuming the dividend option is set to paid-up additions.
The insuring clause is the section of an insurance policy that outlines the risks assumed by the insurer. In other words, this clause details exactly the risks the insurer is liable for paying and defines the scope of the coverage.
An incontestability clause is a clause in most life insurance policies that prevent the provider from voiding coverage due to a misstatement by the insured after a specific amount of time has passed.
Paid-up life insurance is an option that allows you to keep a whole life insurance policy in force without paying any premiums for a while, or permanently. If you die your family will get the original death benefit, less the amount that was deducted from the cash value to pay the premiums.
Nonforfeiture: A Nonforfeiture Benefit must be offered with Long Term Care Insurance policies. The nonforfeiture benefit is designed to ensure that if you lapse your policy (i.e., stop paying premiums) after a specified number of years, you retain some benefits from the policy.
20-Pay Whole Life Insurance from Shelter Insurance® lets you pay off your policy in 20 years, while providing protection for the rest of your life, as long as you pay the premiums when due. If you start early enough, you can complete your payments before you retire, when you might face a fixed or reduced income.
But if your primary beneficiary dies before you do, then the death benefit would be paid to any contingent beneficiaries that you named on your application. If there are no contingent beneficiaries, then the death benefit will most likely be paid directly into your estate.
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 guaranteed insurability (GI) rider is available on certain life insurance policies and allows you to purchase additional insurance at specific dates in the future (subject to minimums and maximums) without having to go through an exam or answer health questions.
What is the advantage of reinstating a life insurance policy as opposed to applying for a new one? Policy premium in a reinstated policy will be set according to the insured original age.
Accidental death benefits are riders or provisions that may be added to basic life insurance policies at the request of the insured party. This means that the beneficiary receives the death benefit paid by the policy itself plus any additional accidental death benefit covered by the rider.
In the case of accidental death, the insurance company typically pays twice the face value of the policy, hence its other moniker: the double indemnity rider. These policies also typically cover other major injuries, such as the loss of a limb or vision, at a portion of the face value.
A Paid-up policy does not accumulate further bonuses but the bonus accumulated prior to making the plan paid-up is payable. Surrender – you can surrender the policy if at least 3 years' premium has been paid, i.e. the policy has acquired a paid-up value.
A policyowner is permitted to take out a policy loan on a whole life policy at what point? What happens when a policyowner borrows against the cash value of his life insurance policy? The policy proceeds would be reduced by the outstanding loan balance. Which of these is NOT a common life insurance nonforfeiture option
Whose life is covered on a life insurance policy that contains a payor benefit clause? A payor benefit clause is generally added to a life policy that insures the life of a juvenile.
In terms of insurance, a forfeiture takes place when the policyholder defaults on the payment of premiums, which is also known as an insurance policy lapse. As a result, the policy is no longer in effect and the premiums already paid are forfeited by the insurer.
A policy loan is issued by an insurance company and uses the cash value of a person's life insurance policy as collateral. If a borrower fails to repay a policy loan, the money is withdrawn from the insurance death benefit.
Which of the following settlement options in life insurance is known as straight life? Correct! The life-income option, also known as straight life, provides the recipient with an income that he or she cannot outlive.
Paid-up additional insurance is available as a rider on a whole life policy. It lets policyholders increase their death benefit and living benefit by increasing the policy's cash value. Paid-up additions themselves then earn dividends, and the value continues to compound indefinitely over time.
An absolute assignment is typically intended to transfer all your interests, rights and ownership in the policy to an assignee. It may state that you transfer all rights, title, and interest in the policy to the assignee. Some insurance companies use an “ownership clause” to accomplish this transfer.
An endowment policy is essentially a life insurance policy which, apart from covering the life of the insured, helps the policyholder save regularly over a specific period of time so that he/she is able to get a lump sum amount on the policy maturity in case he/she survives the policy term.
Payor Benefit — a provision under which premiums are waived if the person paying the premiums becomes disabled or dies. This option is often used when the insured is the child or spouse of the policyholder.
Which two terms are associated directly with the way an annuity is funded? Single payment or periodic payments. Annuities are characterized by how they can be paid for: Either a single payment (lump sum) or through periodic payments in which the premiums are paid in installments over a period of time.
In what part of an insurance policy are policy benefits found? he insurer's obligation to pay a death benefit upon an approved death claim While a life policy is in force, the insuring clause states the insurer's obligation is to pay the death benefit to the beneficiary when a death claim is approved.
A life insurance policy will lapse when premium payments are missed and cash surrender value is exhausted on a life insurance policy. The term lapse refers to a “lapse in coverage”, meaning the life insurance contract will no longer pay a death benefit or provide any insurance coverage for the insured person.
Which statement is NOT true regarding a Straight Life policy? Its premium steadily decreases over time, in response to its growing cash value. Which Universal Life option has a gradually increasing cash value and a level death benefit? Which of the following best defines target premium in a universal life policy?
It is the period of time during which the annuitant makes premium payments into the annuity. Answer: A. It may last for the lifetime of the annuitant.
A conditional receipt gives an insurance company a window of time in which they can ultimately issue or refuse to approve the policy. If during this time, the applicant for a life insurance contract dies, the company will pay a death benefit if the policy would have been issued.
A modified endowment contract (MEC) is a tax qualification of a life insurance policy whose cumulative premiums exceed federal tax law limits. The taxation structure and IRS policy classification changes after a life insurance policy has morphed into a modified endowment contract.
a) The insurer may terminate the contract only at renewal for certain conditions. until the insured reaches age 65. When a reduced-paid up nonforfeiture option is chosen, what happens to the face amount of the policy? a) It is reduced to the amount of what the cash value would buy as a single premium.
