Living Benefits of Life Insurance

This course provides an in-depth look at the many living benefits that life insurance offers. It examines the various ownership rights that policyowners have which allow them to access policy benefits during an insured’s lifetime. The course explains the source of most living benefitsa policy’s cash valueand illustrates how those values grow over time. The course then examines in detail the living benefits that those values can provide: dividends, nonforfeiture options, policy loans and withdrawals, policy assignments and sales, accelerated benefits and policy exchanges. As the course explains, the value and application of living benefits are enhanced by favorable tax treatment, which is characteristic of life insurance. However, the same favorable tax treatment does not extend to living benefits associated with modified endowment contracts, or MECs. The final chapter explains MECs and how the tax treatment of MEC values differs from that of non-MEC policies.
 
The content and explanations this course offers are enhanced by interactive exercises and videos throughout. 

This is an intermediate level course. Upon conclusion, students will be able to:

  • describe the rights that life insurance policyowners can exercise by virtue of policy ownership
  • explain how permanent life insurance policies develop cash values, which are the source of most living benefits
  • describe the options for taking policy dividends
  • explain the different nonforfeiture options available to policyowners, and when each may be appropriate
  • demonstrate an understanding of life insurance policy loans and their effect on policy values
  • demonstrate an understanding of life insurance policy withdrawals and their effect on policy values
  • explain the differences between collateral and absolute policy assignments
  • define and compare viatical and life settlements
  • explain the various ways insurance companies provide for acceleration of life insurance policy death benefits
  • describe how life insurance policies can be exchanged, tax free, for similar products under Internal Revenue Code Section 1035
  • explain why and how the tax treatment of living benefits from modified endowment policies differs from the tax treatment of living benefits from non-modified endowment policies
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