Which of the following life insurance policies allows a policyowner to take out a loan from the policy cash value?

Asked by: Jannie Koch  |  Last update: February 11, 2022
Score: 4.3/5 (16 votes)

Both the universal life policy and whole life policy allow withdrawals or loans against the cash value of the policy. Another type of insurance, variable life, offers additional investment options in separate accounts. It also requires that the policy owner take time to manage the investments.

Which of these types of life insurance allows the policyowner?

Which of these types of life insurance allows the policyowner to have level premiums and to also choose from a selection of investment options? A life insurance policy that has a level premium but allows the policyowner to choose from a selection of investment options is known as Variable Life.

Which type of life insurance policy allows a policyowner the choice of investments along with flexible?

Universal life insurance is a type of permanent life insurance that allows you to build cash value, withdraw funds, and may have basic investment options. What is unique about this type of insurance is that it offers flexible premiums, giving the policy owner some ability to vary premium payments as income changes.

Can a life insurance policyowner take out a policy loan?

As cash value builds in a whole or universal life insurance policy, policyholders can borrow against the accumulated funds. ... Something else to know: This loan isn't taking money from your own cash value. “You are actually borrowing from the insurance company and using your policy's cash value as collateral,” says Reich.

What type of life insurance policy allows the policyholder to borrow money against the cash value in the policy?

Cash value life insurance is a type of permanent life insurance that includes an investment feature. Cash value is the portion of your policy that earns interest and may be available for you to withdraw or borrow against in case of an emergency.

What Should I Do With My Cash Value Universal Life Insurance Policies? - YMYW podcast

23 related questions found

What limits the amount that a policyowner may borrow from a whole life insurance policy?

What limits the amount that a policyowner may borrow from a whole life insurance policy? Cash value - The amount available to the policyowner for a loan is the policy's cash value. ... A policyowner fails to pay the premium due on his whole life policy after the grace period passes, but the policy remains in force.

What type of life insurance has a cash value?

Whole life and universal life are forms of life insurance that have a cash value component.

When calculating the amount a policyowner may borrow from a variable life policy?

When calculating the amount a policyowner may borrow from a variable life policy, what must be subtracted from the policy's cash value? The cause of loss insured against. Be fined a sum of $1,000.

Which benefit is normally payable to a life insurance policyowner when the insured's life expectancy has been severely limited?

An Accelerated Death Benefit (ADB) allows a life insurance policy owner to receive a portion of their death benefit from their insurance company in advance of their death. In most cases, the policyholder must be terminally ill, usually with a life expectancy of two years or less.

Can I use my life insurance policy as collateral for a loan?

You can use a term or permanent life insurance policy as collateral for a loan, although more lenders may accept a permanent policy. ... Term life: Term life lasts for a set number of years and provides a payout if you die while the policy is active, so a policy can protect your lender if you die before repaying the debt.

What is payable to the policyowner?

waive the premium payments in the event the insured becomes totally disabled. What is payable to a policyowner if a whole life policy is surrendered prior to its maturity date? The loan value. The cash value. The face amount minus any past due premiums and outstanding loans.

What kind of special needs would a policyowner require with an adjustable life insurance policy?

What kind of special need would a policyowner require with an Adjustable Life insurance policy? As financial needs and objectives change, the policyowner can make adjustments to the premium and/or face amount. does not guarantee a return on investment accounts.

Which life insurance policy allows the policyowner to choose where they want their funds invested?

Variable life insurance policies permit policyowner's to choose where they want premiums invested.

Which of the following types of insurance policies is most commonly used in credit life insurance?

Credit life insurance and credit disability insurance are the most commonly offered forms of coverage. They also may go by different names. For example, a credit life insurance policy might be called "credit card payment protection insurance," "mortgage protection insurance" or "auto loan protection insurance."

Which of the following would help prevent a universal life policy from lapsing?

Which of the following would help prevent a universal life policy from lapsing? The policy contains sufficient cash value to cover the cost of insurance. All other factors being equal, what would the premium be like in a survivorship life policy as compared to the premium in a joint life policy?

Which of the following types of policies allows for a flexible premium?

Universal life insurance policies offer flexible premiums that may allow you to adjust how much you'll pay each year by accessing some of the policy's cash value (though you will need to pay the minimum premium amount or the policy will lapse).

Which life insurance policy provision allows a policyowner to cancel the policy and receive a full refund?

The free look period is a required period of time, typically 10 days or more, in which a new life insurance policy owner can terminate the policy without penalties, such as surrender charges.

Which life insurance policy option allows the policyowner to have coverage equal to the net death benefits of the lapsed policy?

Extended-Term Insurance

Choosing the nonforfeiture extended term option allows the policy owner to use the cash value to purchase a term insurance policy with a death benefit equal to that of the original whole-life policy. The policy is calculated from the insured's attained age.

What is an insurance policy's grace period quizlet?

What is an insurance policy's grace period? Period of time after the premium is due but the policy remains in force.

When a policyowner cash surrenders a universal life insurance policy?

When a policyowner cash surrenders a Universal Life insurance policy in it's early years, this may be considered a red flag for an Anti-Money Laundering violation.

What Nonforfeiture option allows the policyowner to receive the policy's cash value?

What nonforfeiture option allows the policyowner to receive the policy's cash value? The cash surrender value allows the policyowner to receive the policy's cash value.

Which of the following is guaranteed to the policyowner through Nonforfeiture values?

Terms in this set (66) Nonforfeiture values guarantee which of the following for the policyowner? That the cash value will not be lost. ... Nonforfeiture values give the insured the right to the cash value even if the policy lapses or is surrendered.

How is the cash value of a life insurance policy determined?

To calculate the cash surrender value of a life insurance policy, add up the total payments made to the insurance policy. Then, subtract the fees that will be changed by the insurance carrier for surrendering the policy.

What are the 3 types of life insurance?

There are three main types of permanent life insurance: whole, universal, and variable.

What is net cash value in life insurance?

The cash value component serves as a living benefit for policyholders from which they may draw funds. The life insurance net cash value is what the policyholder or their beneficiary has left over once the insurance company deducts its fees or any expenses incurred during the ownership of the policy.