Life Insurance Policy Provisions, Options, and Riders
An owner stops paying premiums on a whole life policy and elects nothing. What does the policy generally do with the cash value?
Answer and explanation
Answer: C. Extended term is the usual automatic nonforfeiture option, keeping the full face amount in force as term insurance for whatever period the value will buy. Reduced paid-up must ordinarily be elected, and the insurer does not simply refund or hold the value.Source: PSI — New York DFS Insurance Candidate Information Bulletin — Outline, automatic nonforfeiture option
More life insurance policy provisions, options, and riders questions
- Why does a life income option pay a younger payee less each month than an older payee for the same proceeds?
- Why does the one-year term dividend option produce more death benefit per dividend dollar than paid-up additions?
- Why is a dividend on a participating life policy generally not taxable to the owner?
- Why is naming a minor directly as beneficiary of a life policy usually discouraged?
- Why might an owner name a trust as the beneficiary of a life insurance policy?
- A beneficiary elects a fixed period of ten years and dies in year six. What becomes of the remaining instalments?
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