1. Today’s Lecture - #16 Sample Whole Life Insurance Policy Insured John Doe Age 35 Face Amout$100,000 Policy DateAugust 1, 1995 TypeWhole Life Paid Up at 90 Participating Premium$1533/year for 55 years

2. Policy Terms (Page 737) OwnerJohn Doe BeneficiaryJane Doe

3. Table of Guaranteed Values (page 738) End of$100,000 Policy August Cash Paid-Up Extended Term Year 1 Value Insurance Insurance To 10 2005 11,411 37,400 Oct 13, 2023 15 2010 19,629 51,900 Jun 19, 2031

4. Life Insurance – Example 1 John 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)0 B)$11,411 C)$37,400 D)$100,000 E)None of the above

5. Life Insurance – Example 2 What if John Doe had selected the Paid-Up insurance option instead? How much does Jane receive? A0 B$11,411 C$37,400 D$100,000 ENone of the above

6. Statement of Policy Costs and Benefit Information (Page 739) Dividend Choices Reduce Premium Paid-Up Additions Life Insurance Cost Indices 1020 Surrender Cost Index 3.58.69 Net Payment Cost Index 12.22 9.18 Equivalent Dividend Index 3.11 6.15

7. Section 1 - The Contract (Page 740) Life Insurance Benefit Entire Contract; Changes Incontestability Suicide Misstatement of Age or Sex

8. Life Insurance – Example 3 John Doe commits suicide on August 2, 1995, the day after the policy was issued? How much does Jane receive? A0 B$1533 C$50,000 D$100,000 ENone of the above

9. Section 2 - Ownership (Page 740) The Owner Transfer of Ownership Collateral Assignment

10. Section 3 - Premiums and Reinstatement (Page 741) Premium Payment Payment Frequency (Assume annual) Grace Period - 31 days Premium Refund at Death (Ignore for assignment) Reinstatement

11. Section 4 - Dividends (Page 741) Annual dividends Use of dividends Paid-up additions Dividend accumulations Premium payments Dividend at death (Ignore for assigment)

12. Section 5 - Cash Values, Extended Term and Paid-Up Insurance Cash Value Extended Term Insurance Paid-Up Insurance Cash Surrender Table of Guaranteed Values

13. Life Insurance – Example 4 John 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)0 B)$4,629 C)$36,900 D)$85,000 E)None of the above

14. Section 6 - Loans (Page 743) Loans Policy Loan Premium Loan Loan Value Policy Debt Loan Interest Specified Rate (8%) Variable Rate