When a policy is in force for a longer duration, the better the cash values and the nonforfeiture values. D) during the last 6 months, C) minus indebtedness and without interest. C) Cash value is surrendered to policyowner A) Insured becomes unemployed With the extended term option, you can choose to use the cash value in a whole life insurance policy to term insurance, allowing you to stop paying premiums. C) take out a policy loan B) past due premiums that have not been paid by the end of the grace period XCEL Chapter 4 Part 2 Flashcards | Quizlet He is a CFA charterholder as well as holding FINRA Series 7, 55 & 63 licenses. What Is a Nonforfeiture Clause? 4 Payout Options Explained - Investopedia B) Entire Contract clause B) Ike may eventually take out a policy loan B) Waiver of premium Which of these is considered to be a Living Benefit option in a life insurance policy? Increased proceeds can be provided through accumulation of interest You can learn more about the standards we follow in producing accurate, unbiased content in our. Indicate whether each of the following items is a real or nominal account and whether it appears in the balance sheet or the income statement. All of the following are considered to be nonforfeiture options You are eligible for the reduced "paid up" contingent nonforfeiture benefit when all three conditions shown below are met: The premium you are required to pay after the increase exceeds your original premium by the same percentage or more shown in the chart below; Triggers for a Substantial Premium Increase Issue Age Under 65 65-80 Over 80 Life Income, All of the following statements are true regarding a policys Grace period EXCEPT Cash surrender value applies to the savings element of whole life insurance policies. D) beneficiary assignment, Mike and Ike are 30 year old identical twins. Fin 351 Flashcards | Chegg.com Recent Examples on the Web This relatively unknown nonforfeiture option is called a life settlement. How are policyowner dividends treated in regards to income tax? How much will the insurer pay? How are surrender charges deducted in a life policy with a rear-end loaded provision? \text { Prepaid Rent } & 9,500 & \\ Reduced Paid-up Coverage can be added at specific events such as marriage or having a child Sheila would like to purchase a cash value life insurance policy. D) Accelerated death benefit, Barbaras policy includes a rider which allows her to purchase additional insurance at specific dates or events without evidence of insurability. This provision is usually provided with an increase in premium What are collateral assignments normally associated with? He forgot to pay the premium that was due last week. However, the death benefit that surviving dependents of the policy owner would receive is lower than the amount of cash value in the original life insurance policy. Whole Life Insurance: Whats the Difference? revoke an absolute assignment C) aviation automatically add the amount of interest due to the loan balance. One life insurance policy provision specifies that - Course Hero Financial Modeling & Valuation Analyst (FMVA), Commercial Banking & Credit Analyst (CBCA), Capital Markets & Securities Analyst (CMSA), Certified Business Intelligence & Data Analyst (BIDA), Financial Planning & Wealth Management (FPWM). g. Income taxes of$55,539 are owed but unrecorded and unpaid. Which statement is true regarding policy dividends? B) waiver of premium In a life insurance policy, which provision states who may select policy options, designate and name a beneficiary, and be the recipient of any financial benefits from the policy? Sometimes, a policy expires after a so-called grace period. What is an insurer required to do when faced with an error made under the Misstatement of Age provision? The nonforfeiture benefit is designed to ensure that if you lapse your policy (i.e., stop paying premiums) after a specified number of years, you retain some benefits from the policy. Quickly and professionally. Policy loans may still be made It is taxed as ordinary income. C) A prorated death benefit based on the amount of insurance the insureds premiums would have been if purchased at the correct age A) Accumulation at Interest Option C) Reduced paid-up insurance C) are limited by the face amount of the policy Forfeiture is broadly defined as the loss of property for failing to obey the law, and that property is generally lost to the state. dividend amount used toward purchase For example, if you purchase a policy when you were 20 and you paid until age 55, you would receive a term policy that is less than 35 years. Refer to the earlier problem. ", NAIC.org. A) Transfer ownership of the policy Kurt is an active duty serviceman who was recently killed in an accident while home on leave. the policy may be paid up early by using policy dividends. B) Insuring provision Nonforfeiture Definition & Meaning - Merriam-Webster Life insurance policyholders can select one of four nonforfeiture benefit options: the cash surrender value, extended term insurance, loan value, and paid-up insurance. B) The insurer withholds the cost basis C) Reduction of Premium P cannot assign ownership of the policy while premiums are being waived, Which of these are NOT an example of a Nonforfeiture option? D) The policys cost basic is exempt from taxation, D) The policys cost basic is exempt from taxation. the benefit can be offered as a rider at a specific extra cost or may be at no cost. Cash surrender value is the accumulated portion of a permanent life insurance policy's cash value that is available to the policyholder upon surrender of the policy. A) Waiver of premium provision $50,000 minus any outstanding policy loans. Which military service exclusion clause would pay upon his death? An insurance contract must contain all of the following to be considered legally binding EXCEPT a) Consideration b) Competent parties c) Beneficiary's consent d) Offer and Acceptance. B) Free look period All of the following are considered to be nonforfeiture options available to a policyowner EXCEPT Options a) Extended Term Insurance b) Cash Surrender c) Reducation of Premium d) Reduced Paid-Up Insurance Answer: c) Reduction of Premium Those on Social Security disability automatically qualify for this benefit Annuities pay regular payments as outlined in the contract. Quickly and professionally. Which dividend option would an insurer invest the policyowners money and add any interest earnings as the dividends accrue? B) Purchase additional coverage with no evidence of insurability required Insurance Exam Review Questions Flashcards | Chegg.com An insurer can be protected from adverse selection with which policy provision? The nonforfeiture clause may also become available when the holder of a whole life insurance policy surrenders the policy. beneficiarys age, M has an insurance policy that also has an outstanding policy loan at the time of Ms death. Which statement regarding the Misstatement of Age provision is considered to be true? Pat owns a 20-pay life policy with a paid-up dividend option. During the claim process, the insurer discovers that L had understated her age on the application. Never tax deductible. Which life policy is designed to provide the policyowner a hedge against the effects of inflation? See the bus stats for the Lincolnville School District. B) Age B) The policy will be voided with no death benefits paid While investigating the claim, the insurer discovered material misrepresentations made by P during the application process. A life insurance policy normally contains a provision that restricts coverage in the event of death under all of the following situations EXCEPT. Which of the following is NOT a common life insurance policy rider? To keep advancing your career, the additional CFI resources below will be useful: Within the finance and banking industry, no one size fits all. B) One year term Consider consulting a financial advisor who can guide you on choosing an option that will best fit your circumstances. B) It allows for policy loans to be advanced to the insured in the event of unemployment A criminal conviction is required for civil forfeiture. Extended Term Have a great time ahead. What provision can Sheila add to her policy to address this concern? A) dividend option B) settlement option C) nonforfeiture option D) interest-only option. "Standard nonforfeiture law for life insurance.". C) all remaining cash values are paid to the policyowner Chapter 8 Quiz Flashcards | Quizlet Investopedia requires writers to use primary sources to support their work. If cash has accumulated in the policy, state law forbids companies from keeping it and cancelling the policy. The Accelerated Death Benefit provision in a life insurance policy is also known as a(n), Which statement is TRUE in regards to a policy loan? Whole life insurance is permanent life insurance that pays a benefit upon the death of the insured and is characterized by level premiums and a savings component. B) Cash Dividend Option A) Policy Summary The remaining cash value may be used to purchase an annuity free of commissions or expenses. A nonforfeiture clause is an element included in standard life insurance and long-term care insurance. What is the name of the provision which states that a copy of the application must be attached to the policy when issued? AccountCashAccountsReceivableSuppliesPrepaidRentEquipmentAccumulatedDcprcciationOtherAssetsAccountsPayableUnearnedServiceRevenueNotePayable(due2022)CommonStockRetainedEarnings,12/31/2018ServiceRevenueWagesExpenseRentExpenseInterestExpenseTotalsDebit$3,10015,9004,2009,500625,00060,900137,000229,0004,500$1,089,100Credit$104,0009,40011,20050,000279,50037,000598,000$1,089,100.