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Fundamentals of Risk and Insurance, 11th Edition by Therese M. Vaughan, Emmett J. Vaughan

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CHAPTER OBJECTIVES

When you have finished this chapter, you should be able to

  • Describe the nonforfeiture options in life insurance contracts and explain the source of these values
  • Identify and describe the dividend options in life insurance policies and explain the source of dividends
  • Explain the importance of the disability waiver of premium provision and the guaranteed insurability option

In addition to those provisions discussed in the last chapter that are included in all life insurance policies, many provisions are included only in certain contracts or are optionally included at the request of the insured. These provisions are the subject matter of this chapter. First, we will examine the nonforfeiture values, which are included in those policies that accumulate a cash value. In addition, we will discuss the dividend provisions found in participating contracts. Finally, we will consider a number of optional provisions that can be inserted into most policies to provide additional benefits or to deal with special situations.

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NONFORFEITURE VALUES

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As you will recall from the discussion of the grace period in the preceding chapter, if the insured fails to pay the premium within ...

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