Today’s Lecture - #16 Sample Whole Life Insurance PolicyPolicy Terms (Page 737)Table of Guaranteed Values (page 738)Life Insurance – Example 1Life Insurance – Example 2Statement of Policy Costs and Benefit Information (Page 739)Section 1 - The Contract (Page 740)Life Insurance – Example 3Section 2 - Ownership (Page 740)Section 3 - Premiums and Reinstatement (Page 741)Section 4 - Dividends (Page 741)Section 5 - Cash Values, Extended Term and Paid-Up InsuranceLife Insurance – Example 4Section 6 - Loans (Page 743)Today’s Lecture - #16Sample Whole Life Insurance PolicyInsured John DoeAge 35Face Amout $100,000Policy Date August 1, 1995Type Whole Life Paid Up at 90ParticipatingPremium $1533/year for 55 yearsPolicy Terms(Page 737)Owner John DoeBeneficiary Jane DoeTable of Guaranteed Values(page 738)End of $100,000Policy August Cash Paid-Up Extended TermYear 1 Value Insurance Insurance To10 2005 11,411 37,400 Oct 13, 202315 2010 19,629 51,900 Jun 19, 2031Life Insurance – Example 1John 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) 0B) $11,411C) $37,400D) $100,000E) None of the aboveLife Insurance – Example 2What if John Doe had selected the Paid-Up insurance option instead? How much does Jane receive?A 0B $11,411C $37,400D $100,000E None of the aboveStatement of Policy Costs and Benefit Information (Page 739)Dividend ChoicesReduce PremiumPaid-Up AdditionsLife Insurance Cost Indices 10 20Surrender Cost Index 3.58 .69Net Payment Cost Index 12.22 9.18Equivalent Dividend Index 3.11 6.15Section 1 - The Contract(Page 740)Life Insurance BenefitEntire Contract; ChangesIncontestabilitySuicideMisstatement of Age or SexLife Insurance – Example 3John Doe commits suicide on August 2, 1995, the day after the policy was issued? How much does Jane receive?A 0B $1533C $50,000D $100,000E None of the aboveSection 2 - Ownership(Page 740)The OwnerTransfer of OwnershipCollateral AssignmentSection 3 - Premiums and Reinstatement (Page 741)Premium PaymentPaymentFrequency (Assume annual)Grace Period - 31 daysPremium Refund at Death (Ignore for assignment)ReinstatementSection 4 - Dividends(Page 741)Annual dividendsUse of dividendsPaid-up additionsDividend accumulationsPremium paymentsDividend at death (Ignore for assigment)Section 5 - Cash Values, Extended Term and Paid-Up InsuranceCash ValueExtended Term InsurancePaid-Up InsuranceCash SurrenderTable of Guaranteed ValuesLife Insurance – Example 4John 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) 0B) $4,629C) $36,900D) $85,000E) None of the aboveSection 6 - Loans(Page 743)LoansPolicy LoanPremium LoanLoan ValuePolicy DebtLoan InterestSpecified Rate (8%)Variable
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