The cash surrender value of a life insurance policy is the amount of money that the policyholder would receive if they chose to surrender their policy to the insurance company. The cash surrender value is typically less than the face value of the policy, and the policyholder may also be subject to surrender charges. Is … Read more
The “incidents of ownership” of a life insurance policy are the rights and privileges that are attached to the policy. These include the right to change the beneficiary, the right to borrow against the policy, the right to cash in the policy, and the right to make changes to the policy. The owner of a … Read more
A Modified Endowment Contract (MEC) is a life insurance policy that has been altered in such a way that it no longer meets the requirements of the Internal Revenue Code. This means that the policy is no longer eligible for the tax breaks that are typically associated with life insurance policies. There are a few … Read more
Reading into accidental death benefits means that if you die as a result of an accident, your beneficiaries will receive a death benefit. This benefit is in addition to any other death benefits that may be payable under your life insurance policy. What is considered an accidental death for life insurance? There is no one-size-fits-all … Read more
. What is Bank Owned Life Insurance (BOLI)? How does Bank Owned Life Insurance (BOLI) work? How much can you put into a LIRP? There is no limit to how much you can put into a life insurance policy. The only limit is the maximum death benefit that the insurer is willing to provide. How … Read more
A viatical settlement is a life insurance policyholder’s sale of their life insurance policy to a third party for more than its cash surrender value, but less than its face value. The third party becomes the new owner and beneficiary of the policy and pays the policy premiums. When the original policyholder dies, the third … Read more
Paid-up additional insurance is a type of life insurance policy that allows the policyholder to make additional premium payments in order to increase the death benefit of the policy. The policyholder can make these additional payments at any time, and they do not need to be made on a regular basis. When the policyholder dies, … Read more
A participating policy is a life insurance policy that pays dividends to its policyholders. The dividends are based on the company’s profitability and are typically paid out in cash, although some companies offer policyholders the option to reinvest their dividends. Dividends are not guaranteed, and the amount of the dividend may vary from year to … Read more
An irrevocable beneficiary is someone who has been designated by the policyholder to receive the death benefit from a life insurance policy. The designation is irrevocable, which means that it cannot be changed without the beneficiary’s consent. This is in contrast to a revocable beneficiary, who can be changed at any time by the policyholder. … Read more
When a life insurance policyholder dies, the death benefit is paid to the named beneficiaries. However, if the policyholder stops paying premiums, the policy will lapse and the death benefit will be forfeited. Nonforfeiture clauses are designed to protect the policyholder’s investment in the event of lapse, by providing options for continuing the coverage in … Read more
