Chad, age 32, owns an ordinary life insurance policy with face amount of $200,000. The following riders are attached to the policy: additional benefit of $50,000 if death occurs from an accident, and guaranteed purchase option. For each scenario, answer the question that follows. Treat each case separately. 4. Twenty years after the policy was issued, Chad felt that the premium payments are financially burdensome. He wants to reduce his annual premium outlay (at least temporarily), but he wants to keep the policy limit as is, as well as the duration of insurance coverage. If Chad’s policy pays dividend, which dividend option fits Chad’s objective? Circle one. a) Paid-up Addition. b) Dividend Accumulation. c) Premium payment. 5. Chad wants to make sure that when he dies, his mother will receive income for 20 years. Which option of payment of policy proceeds fits Chad’s objective? Circle one. a) Life income option. b) Fixed amount option. c) Fixed period option 6. Ten years after the policy was issued, Chad wants to buy a house. He doesn’t have enough money to pay for the down payment but he doesn’t want to surrender his policy. What advice can you give to Chad? 7. Chad wants to retire and does not want to pay premiums anymore on his policy. He does not want to surrender the policy and still wants to be covered for life. Which nonforfeiture option fits Chad’s objective? Circle one. a) Extended Insurance. b) Paid-up Insurance. c) Surrender for Cash.
Chad, age 32, owns an ordinary life insurance policy with face amount of $200,000. The following riders are attached to the policy: additional benefit of $50,000 if death occurs from an accident, and guaranteed purchase option. For each scenario, answer the question that follows. Treat each case separately. 4. Twenty years after the policy was issued, Chad felt that the premium payments are financially burdensome. He wants to reduce his annual premium outlay (at least temporarily), but he wants to keep the policy limit as is, as well as the duration of insurance coverage. If Chad’s policy pays dividend, which dividend option fits Chad’s objective? Circle one. a) Paid-up Addition. b) Dividend Accumulation. c) Premium payment. 5. Chad wants to make sure that when he dies, his mother will receive income for 20 years. Which option of payment of policy proceeds fits Chad’s objective? Circle one. a) Life income option. b) Fixed amount option. c) Fixed period option 6. Ten years after the policy was issued, Chad wants to buy a house. He doesn’t have enough money to pay for the down payment but he doesn’t want to surrender his policy. What advice can you give to Chad? 7. Chad wants to retire and does not want to pay premiums anymore on his policy. He does not want to surrender the policy and still wants to be covered for life. Which nonforfeiture option fits Chad’s objective? Circle one. a) Extended Insurance. b) Paid-up Insurance. c) Surrender for Cash.
