Life Insurance Chapter Four Flashcards

Payments that are guaranteed for the lifetime of the recipient

Payments are guaranteed for the lifetime of the recipient or a specified period of time, whichever is longer

Payments are guaranteed for the lifetime of 2 or more recipients. Upon the death of the first recipient, payment continues to the survivor(s)

Found in policies that accumulate cash valuesProtect the PO against total loss of benefits if the policy should lapse or be canceled3 options add flexibilityThe cash value is used to fund the option selected

Cash SurrenderReduced Paid Up (uses cash value to purchase a single premium that is paid up and reduces face amount of policy)Extended term (uses cash value to buy a single premium policy of the same face value)

Interest earned on (blank) is taxable

Should the total accumulation of dividends exceed the accumulated premiums paid, the exceeding amount is taxable as normal income

Only use cash values to reduce benefits in some way

CashPremium ReductionAccumulate at Interest (retained by insurer and paid to PO annually)Paid Up Additions (purchases a single premium, additional perm benefits at the insured's attained age)One-Year Term- (single premium, 1 year term policy, for amount equal to the cash value) Paid Up OptionAcceleration of Endowment

This provision enables the insurer to automatically borrow from the cash value to cover a premium to prevent the contract from lapsing

Interest Only (payments are paid at least annually and are interest only; capital conservation) (the only option whereby the principle never decrease unless withdrawn by beneficiary)Fixed Amount Fixed Period (length, interest rate, face amount of policy)Life Income OnlyLife Income Period CertainLife Income Joint and SurvivorJoint Life