life and Health Insurance - FIN-3660
Abu khaled
whole20life20ppt20example.pptSample Whole Life Insurance Policy
Insured John Doe
Age 35
Face Amount $100,000
Policy Date August 1, 2015
Type Whole Life Paid Up at 90
Participating
Premium $1533/year for 55 years
Policy Terms
Owner John Doe
Beneficiary Jane Doe
Sample Table
of Guaranteed Values
End of $100,000
Policy August Cash Paid-Up Extended Term
Year 1 Value Insurance Insurance To
10 2015 11,411 37,400 Oct 13, 2043
15 2030 19,629 51,900 Jun 19, 2051
Life Insurance – Example 1
John Doe terminates the policy on August 1, 2025.
He selects the extended term option.
John dies on December 12, 2043.
How much does Jane receive?
A) 0
B) $11,411
C) $37,400
D) $100,000
E) None of the above
Life Insurance – Example 2
What if John Doe had selected the Paid-Up
insurance option instead? How much does Jane receive?
A 0
B $11,411
C $37,400
D $100,000
E None of the above
Statement of Policy Costs and Benefit Information
Dividend Choices
Reduce Premium
Paid-Up Additions
Section 1 - The Contract
Life Insurance Benefit
Entire Contract; Changes
Incontestability
Suicide
Misstatement of Age or Sex
Life Insurance – Example 3
John Doe commits suicide on August 2, 2015, the day after the policy was issued? How much does Jane receive?
A 0
B $1533
C $50,000
D $100,000
E None of the above
Section 2 - Ownership
The Owner
Transfer of Ownership
Collateral Assignment
Section 3 - Premiums and Reinstatement
Premium Payment
Payment
Frequency (Assume annual)
Grace Period - 31 days
Premium Refund at Death (Ignore for assignment)
Reinstatement
Section 4 - Dividends
Annual dividends
Use of dividends
Paid-up additions
Dividend accumulations
Premium payments
Dividend at death
Cash Values, Extended Term and Paid-Up Insurance
Cash Value
Extended Term Insurance
Paid-Up Insurance
Cash Surrender
Table of Guaranteed Values
Life Insurance – Example 4
John keeps the policy in force for 15 years and then surrenders it for the cash value. During that time he has paid a total of $22,995 in premiums (15 x $1533) and received a total of $7,995 in dividends. How much of the policy proceeds are taxable income?
A) 0
B) $4,629
C) $36,900
D) $85,000
E) None of the above
Loans
Loans
Policy Loan
Premium Loan
Loan Value
Policy Debt
Loan Interest
Specified Rate (4%)
Variable Rate
