11.1a

Question 1

Until the ______, it was common for an insurer to keep part or all of the accumulated cash value in a forfeited whole life policy. Today, however, in the event that a cash value life policy is ‘forfeited,’ or surrendered, the insurer must pay out the policy’s ‘cash surrender value’ to the policyowner

Answer 1

Armstrong Investigation of 1905

Question 2

______ is the amount payable by the insurer to a policyowner who surrenders his or her whole life policy. The amount payable to the policyowner is based on the policy’s face amount, premium payment structure and length of time in which the policyowner has paid policy premiums.

Answer 2

Cash Surrender Value

Question 3

Mandated by most state legislatures, the ______ requires insurers to pay any accumulated cash value in a whole life policy to the policyowner if he or she stops paying policy premiums to the insurer.

Answer 3

Standard Nonforfeiture Law

Question 4

If the policyowner fails to select a nonforfeiture option, the insurer will automatically issue a paid-up extended ______ with the same face value as the original whole life policy and a term length based on the amount of cash value that the forfeited whole life policy can purchase using the available cash value funds from the original (forfeited) whole life policy.

Answer 4

term life insurance policy

Question 5

As a basic surrender option, the cash surrender option allows a policyowner immediate access to his or her whole life policy’s cash value; however, many states permit insurers to postpone surrender payments for up to 6 months after the surrender of a whole life policy. Another common requirement is that before a cash surrender of a whole life policy can occur, most insurers require that ______.

Answer 5

the policy be in force for at least 3 years after it is issued