Risk and Insurance Essay Sample
- Pages: 2
- Word count: 478
- Rewriting Possibility: 99% (excellent)
- Category: insurance
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Introduction of TOPIC
(a) James should purchase a flexible premium deferred annuity because that would allow him changes in the amount of payments and also the frequency of payments. He has the option of selecting the flexible premium annuity which is either fixed annuity or a variable annuity. (b) Nancy should purchase a fixed annuity and select a life income annuity option that will guarantee her a lifetime income irrespective of how long she lives. Depending on her needs and objectives, the life income option can be selected with a certain number of guaranteed payments. (c) Jennifer should select a life annuity income option with either an installment refund feature or cash refund feature. Under the installment refund option, if the annuitant dies before receiving total income payments equal to the purchase price of the annuity, the payments continue to a designated beneficiary until they equal the purchase price.
Under the cash refund option, if the annuitant dies before receiving total payments equal to the purchase price of the annuity
, the balance is paid in a lump sum to the beneficiary. (d) Fred should purchase a variable annuity,
CHAPTER 15 CASE STUDY:
(a) Since Lorri cannot work as a nurse, she meets the definition of total disability. After a 90-day elimination period, she would receive $2800 monthly for the remainder of the period of disability. (b) The policy contains a residual disability benefit. Since Lorri’s earnings are reduced 50 percent, she would receive a pro rata disability income benefit or $1400 monthly. (c) After two years of benefit payments, the second part of the definition of disability becomes operational. A job as a lab technician is reasonably consistent with Lorri’s education, training, and experience. Lorri would be considered capable of working as a lab technician. Thus, disability benefits would not be payable. (d) Since Lorri has a guaranteed renewable policy, it cannot be cancelled. Lorri alone cannot be singled out for a premium increase. However, premiums for the underwriting class in which Lorri is placed could be increased if premiums for the class are inadequate.
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