Life Insurance Payout Options & Policy Types

Payout Options for Life Insurance Policies

• A lump sum payout is received at annuitization.
• Life Only (Straight Life) provides payments for the rest of the annuitant’s life and pays the highest monthly amount
• Refund Life Annuity guarantees lifetime income. Upon annuitant’s death, any remaining balance is refunded to a beneficiary in cash or installments.
• Joint Life pays two or more than two annuitants and payments cease upon the first death of one of the annuitants.
• Joint and Survivor provides income for two or more people that cannot be outlived and is often used with a period certain.
• Annuities Certain payment is guaranteed for a fixed period or until a certain amount is paid, irrespective of life expectancies.

Types of Life Policies: Quiz Questions

• A decreasing term life insurance policy is best suited to protect a family against losing their home if the insured dies before the mortgage is paid.
• An annually renewable term policy renews each year with an increased premium.
• The accumulation period is the time during which an annuitant contributes to an annuity.
• Life paid-up at age 65 is an example of a limited-pay life policy.
• Cash value growth is not a fixed feature of an Indexed Whole Life policy.
• The death benefit can be increased without evidence of insurability in a universal life policy.
• The death benefit of a traditional whole life policy remains constant over time.
• The life expectancy of the annuitant is taken into consideration when determining annuity payments.
• A variable life insurance policy is one in which the cash value can fluctuate significantly from month to month.
• Deferred annuities best suit an individual at age 40 who wants to use inherited money to create a guaranteed income after retirement at age 60.
• If the insured dies after the end of the term, there is no death benefit to the beneficiary, which is a disadvantage of term insurance.
• The renewable provision allows the policyowner to renew coverage at the expiration date without evidence of insurability.
• A single premium life insurance policy generates immediate cash value.
• The statement that premium is based on the average age of the insureds is true regarding a joint life policy.
• If the insured is also the policyowner of a whole life policy he or she must attain 100 years of age in order to receive the policy’s face amount.