This straight life insurance policy was a non-participating policy with cash values. It had no dividends. I clearly recall the surprise on the faces of clients when they became aware that after a long period...20 years or so...they could get back a large portion of their premiums on surrender of their policies. Here is how that policy worked.
- Death Benefit
The death benefit of the straight life insurance policy is sometimes more pleasingly referred to as the face amount. I cannot recall whether or not there was an option to receive an income from the proceeds at death or it just simply had to be paid in one lump sum. The latter...one lump sum...was more likely the case as those policies were not very large and the income would be too small to be worth the insurance company's effort. The death benefit was...and still is...level for the duration of the policy.
- The Premium
The premium of the straight life insurance policy remained level throughout. By contract it could not be changed. I do, however, recall some unusual premium payment methods which are to some extent still in use. The norm today is to pay your life insurance premiums on a monthly, quarterly, half yearly or yearly basis. These methods have been used for years. the unusual thing was that the premium was popularly paid on a weekly basis. The insurance agent would have a list and go from door to door collecting these premiums every week. Talk about service...he was always around.
Although this practice still exists it is not as popular as it is much easier for the policy owner to draw a check and pay the premium. It can even be paid electronically.
- Cash Values
Straight life insurance policies have cash values just like they did then, however, the cash amount tends to be considerably more than it used to be. In the long run if the insured doesn't die s/he can recover all the cash paid into the policy on surrender of said policy. If they choose not to surrender the policy and they still need cash a loan can be taken from the policy.
- Waiver Of Premium
A waiver of premium rider can be added to the straight life insurance policy. If the insured became disabled s/he would not be required to pay any premiums during disability. On returning to work they would pick up premium payment again. For the benefit to kick in you must be disabled for a minimum of 6 months with most life insurance companies.
- Accidental Death Benefit
The accidental death benefit rider can also be added to the straight life insurance policy. It was more popularly known as double indemnity then. If death should occur in, or as a result of, an accident the life insurance company will pay twice the death benefit to your beneficiaries.
