Final answer:
Ted and Janet must undergo an underwriting process, provide personal and financial information, agree to the policy terms, sign the documents, and pay the initial premium for their variable second-to-die life insurance policy to take effect. The policy also features a cash value account which can be utilized by the policyholders during their lifetime.
Step-by-step explanation:
Ted and Janet are considering a variable second-to-die life insurance policy, which is a type of cash-value (whole) life insurance. To ensure the policy can take effect, several steps need to be completed. First, both Ted and Janet must go through an underwriting process, which may include health questionnaires and medical exams to assess their life expectancy and risk factors. Furthermore, the insurance company will likely require detailed personal and financial information to determine the appropriate terms and premiums. Since the policy is a second-to-die or survivorship policy, the death benefit is only paid out after both insured parties have passed away. This type of policy typically serves the purpose of covering estate taxes or providing for heirs, and the cash value component can be used as a financial account during the policyholders' lifetimes.
Before the policy takes effect, Ted and Janet must agree to the terms, sign the policy documents, and pay the initial premium. Variability in the policy means that premiums or benefits could change over time, possibly linked to the performance of investments chosen by the policyholders or the insurer. Additionally, since it's a second-to-die policy, it's crucial both insured individuals understand that the payout will occur after both of their deaths, which is distinct from individual policies where the benefit is paid upon the first person's death.