Policy Riders, Provisions, Options, and Exclusions
On what basis are dividends paid under a participating whole life policy?
Answer and explanation
Answer: C. NAIC guidance on whole life explains that a participating policy may pay dividends based on the insurer's financial performance, and that dividends can be used to lower premiums or buy more coverage. A guaranteed rate would make the payment something other than a dividend, an index drives indexed products, and a separate account belongs to variable contracts.Source: NAIC — Life Insurance — Whole Life Insurance; participating policies
More policy riders, provisions, options, and exclusions questions
- An owner wants only the children who survive the insured to divide the class benefit equally, without preserving a deceased child's branch. Which designation most directly expresses that intent?
- An owner wants the original permanent insurance plan to continue for a smaller amount with no further premiums. Which nonforfeiture option fits?
- An owner wants to replace a named irrevocable beneficiary with someone else. What additional requirement applies?
- Flexible premium features in universal life policies allow the owner to perform which action?
- From what point does the period for returning a newly issued life policy for a full refund normally run?
- How does a cost of living (COLA) rider adjust policy coverage over time?
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