Question
Sonja, age 25, recently purchased a $100,000 ordinary life insurance policy on her life. The waiver-of-premium rider and guaranteed purchase option are attached to the
Sonja, age 25, recently purchased a $100,000 ordinary
life insurance policy on her life. The waiver-of-premium
rider and guaranteed purchase option are attached to
the policy. For each of the following situations, indicate
the extent of the insurers obligation, if any, to Sonja
or to Sonjas beneficiary. Identify the appropriate policy
provision or rider that applies in each case. Treat each
event separately.
a. Sonja fails to pay the second annual premium due
on January 1. She dies 15 days later.
b. Sonja commits suicide three years after the policy
was purchased.
c. At Sonjas death, the life insurer discovers that
Sonja deliberately lied about her age. Instead
of being 25 years old, as she indicated, she was
actually 26 years old at the time the policy was
purchased.
d. Two years after the policy was purchased, Sonja is
told that she has leukemia. She is uninsurable but
would like to obtain additional life insurance.
e. Sonja is seriously injured in an auto accident. After
six months, she is still unable to return to work.
She has no income from her job, and the insurance
premium payments are financially burdensome.
f. Sonja has a mentally disabled son. She wants to
make certain that her son will have a continuous
income after her death.
g. Sonja lets her policy lapse. After four years, she
wants to reinstate the policy. Her health is fine.
Point out to Sonja how she can reinstate her life
insurance.
h. Sonja wants to retire and does not wish to pay
the premiums on her policy. Indicate the various
options that are available to her.
i. Ten years after the policy was purchased, Sonja is
fired from her job. She is unemployed and is in desperate
need of cash.
j. When Sonja applied for life insurance, she concealed
the fact that she had high blood pressure.
She dies five years later.
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