Chad, age 32, owns an ordinary life insurance policy with face amount of $200,000. The following riders are attached to the policy: guaranteed purchase option and accidental death benefit that states the death benefit will be doubled if death occurs from an accident. For each scenario, answer the question that follows. Treat each case separately.

1. Chad wants to make sure that when he dies, his mother will receive income for 20 years. Which option of payment of policy proceeds fits Chads objective? Circle one.

1. Life income option. b) Fixed amount option. c) Fixed period option

2. Ten years after the policy was issued, Chad wants to buy a house. He doesnt have enough money to pay for the $100,000 down payment but he doesnt want to surrender his policy. What advice can you give to Chad?

3. Chad wants to retire and does not want to pay premiums anymore on his policy. He does not want to surrender the policy and still wants to be covered for life. Which nonforfeiture option fits Chads objective? Circle one.

1. Extended Insurance. b) Paid-up Insurance. c) Surrender for Cash.

4. Three years after the issuance of the policy, Chad was told he had lung cancer. He is uninsurable but he wants to obtain additional $10,000 life insurance coverage. Assuming his policy does not pay dividend.

1. Can he do that? Circle one: Yes (go to part b) No (go to part c)
2. If yes, cite the relevant provision and explain why.
3. If not, cite the relevant provision and explain why not.

5. Chad failed to pay the second annual premium due on January 1. He died 15 days later.

1. Will the insurer pay? Circle one: Yes (go to part b) No (go to part c)
2. If yes, cite the relevant provision and explain why.
3. If no, cite the relevant provision and explain why not.

6. Chad lets his policy lapse. After four years, he wants to get the policy reinstated. Point out to Chad what the two requirements are in order for Chad to get his life insurance back.