Life Insurance Policy Provisions, Options, and Riders
How does the reduction of premium dividend option work?
Answer and explanation
Answer: C. The declared dividend is credited against the next premium and the owner remits the difference, so the saving lasts only for that premium. The contract premium itself is unchanged, and a dividend rarely covers a whole premium.Source: PSI — New York DFS Insurance Candidate Information Bulletin — Outline, dividend reduction of premium
More life insurance policy provisions, options, and riders questions
- How is the amount of cover under a family term rider usually expressed?
- How is the interest credited under the accumulation at interest dividend option treated for tax?
- How is the interest paid under the interest only settlement option treated for tax?
- How is the lump sum paid under the cash settlement option treated for federal income tax?
- How may an accelerated payment of the death benefit be provided under New York law?
- If a cash-value policyowner stops paying premiums and selects the extended term nonforfeiture option, what coverage is provided?
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