Ch 5(c) Options

A policyowner surrenders a whole life policy for a reduced paid-up policy. What will

happen to the cash value?

• It is forfeited

• It decreases

• It remains the same

• It continues to increase

The insured pays $1200 annually for her life insurance premium. This year, she has

accumulated $175 worth of dividends, which she applies to her next premium

payment which will be $1025. Which dividend option has she chosen?

• Cash

• Reduced paid-up

• Reduction of premium

• Accumulate at interest

All the following are nonforfeiture options EXCEPT

• One-year term

• Cash surrender value

• Extended term

• Reduced paid-up insurance.

Which settlement option offers an unchanging amount of benefits until all proceeds are

paid?

• Fixed amount

• Fixed period

• Life income

• Life with period certain

If a policyowner borrows funds from the cash value of her policy and does not pay

back the loan amount, how will a claim on the death benefit be paid?

• The full death benefit will be paid to the beneficiary

• The death benefit paid to the beneficiary will be less the loan amount plus interest

• The death benefit will be equal to the loan amount

• No death benefit will be paid to the beneficiary

Which nonforfeiture option allows for insurance with a lower face amount but

coverage that will remain the same as the original policy?

• Extended term

• Surrender value

• Reduced cash surrender

• Reduced paid-up insurance

Which dividend option allows for the purchase of additional permanent insurance?

• Reduction of premium

• Accumulate at interest

• One-year term

• Paid-up additions