Policy Provisions Flashcards
Life insurance provisions are segregated into 3 distinct categories
- formal provisions
- living options and benefits
- death and disability options and benefits
It is apparent then that a life insurance policy is a _____ contract that favors the _____
-unilateral
-policyowners.
Unless policyowners have the written consent of their irrevocable beneficiaries, they cannot do any of the following:
-surrender the policy
-borrow any part of the accumulated cash values
-assign their policies
-make change in their policies in any way
Policyowners can regain control of their policies if one of the following conditions is satisfied:
-if the irrevocable beneficiaries consent in writing; or
-if the insured or policy owners outlive the irrevocable beneficiaries
4 settlement options
-interest option
-fixed period option
-fixed income option
-life income option
the company holds the proceeds for a specified period of time and, at regular intervals, pays the beneficiary a guaranteed rate of interest. . Interest earnings are paid regularly and are not accumulated. The proceeds of the policy remain the same.
interest option
the company pays the beneficiary equal amounts at regular intervals over a specified period of years. Both the principal amount and the interest earnings are paid out. The amount of each installment is determined by the length of desired period of income.
fixed period option
the policy proceeds are used to pay out a specified amount of income as long as the proceeds last. It pays out both the principal proceeds and the earnings from interest.
fixed amount option
he beneficiary receives a guaranteed regular income for the primary beneficiary’s entire life, no matter how long he or she lives. Principal and interest are paid out with the amount of payment calculated to last a lifetime.
life income option
5 considerations in determining the amount of income paid under any type of life income option
age of beneficiary
sex of beneficiary
interest rate
amount of proceeds
type of option selected
Under this option, the company pays a guaranteed income to the primary beneficiary for as long as he or she lives. Nothing is paid to anyone after the primary beneficiary dies.
life income only
The same income due to the primary beneficiary will be given to the secondary beneficiary until the total payments equal the original policy proceeds. If the secondary beneficiary dies, the next beneficiary will receive the income.
installment refund option
the primary beneficiary is paid an income for life. The unique feature of this option is that if a primary beneficiary dies within a stipulated period of years, the secondary beneficiary will receive payments of the same amount for the balance of that period. If the primary beneficiary dies after the end of the stipulated period, the company’s obligations cease.
Period certain life income
