Unit 6 Life Insurance Policy Options

Question 1

settlement options

Answer 1

used to determine how the proceeds will be distributed to the beneficiaries

Question 2

interest only

Answer 2

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

Question 3

fixed period

Answer 3

-death benefit + guaranteed interest over a set time
-if interest is greater than the guaranteed rate, the final payment will be larger (only increases the amount, not the period in which payments are made)

Question 4

fixed amount

Answer 4

-a fixed amount is paid
-interest earnings will affect the payment period timeframe (increases the timeframe payments are made, not the amount)

Question 5

life income

Answer 5

straight life
-based upon beneficiary’s life expectancy
-guaranteed for life
-payments stop upon death of beneficiary (even if it’s only one payment)

Question 6

life with period certain

Answer 6

-life income to beneficiary
-guaranteed for a minimum amount of time

Question 7

life with refund

Answer 7

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

Question 8

joint and survivor

Answer 8

pays two beneficiaries an income for life. if one dies, the survivor receives the same or a reduced payment

Question 9

access to cash values while insured is living

Answer 9

policyowner makes decision
loan reduces the death benefit (fixed or variable interest)
if interest not paid, loan taken to pay interest
automatic premium loan prevents lapse and interest is charged
insurer must notify policyowner if there is a policy lapse or no cash value
universal life withdrawals have no interest or repayment, fees

Question 10

CARPPO

Answer 10

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