Unit 6: Life Insurance Policy Options

Question 1

interest only

Answer 1

interest is paid on the death benefit
death benefit paid at a later date
interest paid to beneficiary at regular intervals

Question 2

fixed period

Answer 2

principal and interest paid over a period of time
death benefit + guaranteed interest over a set time
if interest greater than the guaranteed rate, final payment will be larger

Question 3

life income

Answer 3

straight life

• based upon the beneficiary’s life expectancy
• guaranteed for life

payments stop upon the death of the beneficiary

Question 4

life income-period certain

Answer 4

life income to the beneficiary
beneficiary chooses the frequency of payments
guaranteed for a minimum amount of time

Question 5

life income- refund

Answer 5

pays the beneficiary an income for life
guarantees payments will at least equal the death benefit
pays someone else the balance of the death benefit if the beneficiary doesn’t live long enough

Question 6

Joint and Survivor

Answer 6

most often used when married couple is beneficiary

pays two beneficiaries an income for life

the survivor receive the same or a reduced payment (100%, 75%, 66 2/3%, 50%)

Question 7

access to cash value

Answer 7

get cash without surrender your policy while insured is living

automatic premium loan

• prevents lapse
• interest is charged

insurer must notify the policy owner

• policy lapse
• no cash value

universal life withdrawals

• no interest or repayment
• fees

Question 8

dividend options

Answer 8

dividends are not guaranteed

CARPPO
Cash
Accumulate Interest 
Reduce next premium amount
Paid up additions at attained age
Paid up insurance sooner
One year term insurance at attained age