Week One Assignment 1 Sametta Rose- Pollydore FIN 334 April 9, 2016

Instructor McAndrew

Week One Assignment 1

A. Sonja fails to pay the second annual premium due on January 1. She dies 15 days later. When it comes to the premium which is the ordinary life insurance, the beneficiary will receive the proceeds of that policy because there is a grace period of 31 days to pay the overdue premium and by Sonja’s death occurring within that time frame of the grace period the beneficiary has the right to receive the proceeds from …show more content…

(Rejda, George, McNamara, 2014).

G. Sonja lets her policy lapse. After four years, she wants to reinstate the policy. Her health is fine. Point out to Sonja how she can reinstate her life insurance. When it comes to this situation, there are a few things that need to be fulfilled before the reinstatement can take place. Evidence of insurability is required, all overdue premiums plus interest must be paid from their respective due dates, any policy loan must be paid or reinstated, with interest from the due date of the overdue premium, the policy must not have be surrendered for its cash value, the policy must be reinstated by a certain period, typically three or five years from the date of lapse. It is also, possible that she would spend less by reinstating her policy rather than starting a new one. (Rejda, George, McNamara, 2014).

H. Sonja wants to retire and does not wish to pay the premiums on her policy. Indicate the various options that are available to her. Sonja has several options of what she can do. The cash value can be used to purchase a reduced paid-up policy, Dividends can also be used to pay up the policy by retirement, she could go with the Nonforfeiture options, she can surrendered for its cash value, under the reduced- paid up insurance option the cash surrender value is applied as a set single premium to purchase a reduced paid up policy, under the extended term insurance option, the