Life Insurance Options Flashcards
Life Insurance Dividend Options
Dividends in Cash
Dividends are paid in cash to the insured
as declared
Life Insurance Dividend Options
Reduce Premiums
Dividends are indicated on the premium
notice and reduce the premium due.
Life Insurance Dividend Options
Accumulate at interest
Dividends are placed on deposit with the
insurer with a guaranteed minimum interest
rate plus any excess interest—essentially
like a savings account.
Life Insurance Dividend Options
Paid-up dividend additions
Dividends are treated as a net single
premium purchasing paid up additional insurance at insured’s attained age rate.
Life Insurance Dividend Options
One-year term insurance
Dividends treated as net single premium, purchasing one-year term insurance at insured’s attained age. Also known as the fifth dividend option
Life Insurance Policy Nonforfeiture Options
Cash surrender value
The insured receives the accumulated cash
value when terminating the policy.
Life Insurance Policy Nonforfeiture Options
Reduced paid-up insurance
An insured terminating a policy receives the
cash value in the form of a paid-up policy
with a smaller face amount.
Life Insurance Policy Nonforfeiture Options
Extended term insurance
The insured receives the cash value in the
form of a paid-up term policy for a specified
duration, with the same face amount as the
original policy
Life Insurance Settlement Options
Interest option
Proceeds may be left to the insurer with a
guaranteed minimum interest rate.
Life Insurance Settlement Options
Fixed period option
The beneficiary receives a fixed number of
payments.
Life Insurance Settlement Options
Fixed amount option
The beneficiary receives a stated amount of
income each period until the proceeds are
exhausted.
Life Insurance Settlement Options
Life income options
The proceeds are paid for the remainder of
one or more beneficiaries’ lives, with various
provisions for remaining funds. These are
annuity payout options
Life Insurance Settlement Options
Straight life income
The proceeds are paid out over the lifetime of
the beneficiary.
Life Insurance Settlement Options
Life income with period certain
Payments are for the annuitant’s lifetime,
subject to a guaranteed minimum number of
total payments. In the event the annuitant dies
before receiving the guaranteed minimum
number of payments, the remaining payments
are made to the beneficiary.
Life Insurance Settlement Options
Life income with refund
Similar to the life income with period certain, except in this option the guaranteed minimum
payment amount is equal to the original
investment in the contract
Life Insurance Settlement Options
Joint and last survivor income option
The proceeds are paid during the lifetimes of
two beneficiaries and can be either the same
income or reduced payments to the survivor.
Riders to Life Insurance Policies
Waiver of premium
In the event of total disability prior to a
certain age, premiums on the life insurance
policy are waived if disability continues past
a certain period of time.
Riders to Life Insurance Policies
Accidental death benefit
double indemnity
Additional death benefit that is payable if
the insured dies by accidental bodily injury.
If the additional amount is equal to the base
policy death benefit, it may be called
double indemnity.
Riders to Life Insurance Policies
Guaranteed insurability
The policyowner may purchase additional insurance at stated intervals without additional proof of insurability.
Clauses, Options, Provisions and Riders
Common disaster
• where actual order of death cannot be
determined
• beneficiary considered to have died first if death
occurs within 30 days of a common accident
Spendthrift • beneficiary cannot assign benefits when an installment option is used • once money leaves insurer, all beneficiary options are open
