Policy Options

Question 1

Nonforfeiture Options

Answer 1

• option to surrender policy
  -If there is cash value remaining he must use one of the following
  nonforfeiture options
• Cash Surrender
• Extended Term Option
• Reduce Paid-up Option

Question 2

Cash Surrender

Answer 2

allows the policyowner to receive the policy’s cash value

Question 3

Extended Term Option

Answer 3

-policyowner to use the policy’s cash value to buy level,
extended term insurance
-for a specified period
-No premium payments

Question 4

Reduced Paid-Up Option

Answer 4

-no more premiums
-face amount is
decreased

Question 5

Dividend Options

Answer 5

• paid dividends to policyowners if the company’s operations result in a divisible
  surplus.
• a return of overcharged premiums, and are therefore not taxable.
• paid to policyholders on an annual basis

Question 6

What is a Cash Option on dividend?

Answer 6

Take the cash

Question 7

What dividend option reduces premium payment?

Answer 7

Reduced Premium Option

Question 8

Accumulate Interest Option

Answer 8

Allows dividends to accumulate interest

Question 9

Paid-Up Additions Option

Answer 9

Purchase single payment whole life coverage

Question 10

One-Year Term Option

Answer 10

Purchase one-year term protection

Question 11

how long can insurance company delay a cash surrender?

Answer 11

Normally, the maximum length of time a life insurance company may
legally defer paying the cash value of a surrendered policy is 6 months (Delayed Payment provision).

Question 12

Is the coverage from an extended term nonforfeiture option equal to the net death benefit of the
lapsed policy or less than the net death benefit?

Answer 12

Equal

Question 13

What are the five dividend options?

Answer 13

• Cash Option
• Accumulated Interest Option
• Paid-Up Additions Option
• One Year Term Option
• Reduced Premium Option