Today s Lecture 16 Sample Whole Life Insurance Policy Insured John Doe Age 35 Face Amout 100 000 Policy Date August 1 1995 Type Whole Life Paid Up at 90 Participating Premium 1533 year for 55 years Policy Terms Page 737 Owner Beneficiary John Doe Jane Doe Table of Guaranteed Values page 738 End of Policy August Year 1 100 000 Cash Paid Up Extended Term Value Insurance Insurance To 10 15 11 411 37 400 Oct 13 2023 19 629 51 900 Jun 19 2031 2005 2010 Life Insurance Example 1 John Doe terminates the policy on August 1 2005 He selects the extended term option John dies on December 12 2023 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 Page 739 Dividend Choices Reduce Premium Paid Up Additions Life Insurance Cost Indices 10 Surrender Cost Index 3 58 Net Payment Cost Index 12 22 Equivalent Dividend Index 3 11 20 69 9 18 6 15 Section 1 The Contract Page 740 Life Insurance Benefit Entire Contract Changes Incontestability Suicide Misstatement of Age or Sex Life Insurance Example 3 John Doe commits suicide on August 2 1995 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 Page 740 The Owner Transfer of Ownership Collateral Assignment Section 3 Premiums and Reinstatement Page 741 Premium Payment Payment Frequency Assume annual Grace Period 31 days Premium Refund at Death Ignore for assignment Reinstatement Section 4 Dividends Page 741 Annual dividends Use of dividends Paid up additions Dividend accumulations Premium payments Dividend at death Ignore for assigment Section 5 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 Section 6 Loans Page 743 Loans Policy Loan Premium Loan Loan Value Policy Debt Loan Interest Specified Rate 8 Variable Rate
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