Florida 2-15 Life, Health and Variable Annuity AgentGeneral Knowledge of Life InsuranceMedium
A client owns a permanent life insurance policy and wants to ensure that if they become totally disabled, their policy's cash value will continue to grow and their death benefit will remain in force without them having to pay premiums. Which rider should they add to their policy?
- APayor Benefit Rider
- BAccidental Death Benefit Rider
- CGuaranteed Insurability Rider
- DWaiver of Cost of Insurance Rider
Show answer & explanationAnswer & explanation
Correct answer: D. Waiver of Cost of Insurance Rider
The Waiver of Cost of Insurance Rider, specific to universal or variable universal life policies, waives the deduction for the cost of insurance if the insured becomes totally disabled, allowing the cash value to continue growing without premium payments.
Why the other options are wrong
- A. This rider is typically found on juvenile policies and waives premiums if the payor becomes disabled or dies.
- B. This rider pays an additional death benefit if death occurs due to an accident, not related to disability premium waiver.
- C. This rider allows the insured to purchase additional insurance without proof of insurability, not related to disability.
Waiver of Cost of Insurance Rider
A rider typically found in universal life policies that waives the monthly deduction for the cost of insurance if the insured becomes totally disabled, allowing the cash value to continue accumulating.
- Applies to universal life type policies.
- Waives only the 'cost of insurance' charge.
- Cash value accumulation continues during disability.
Memory trick: Waiver of COST keeps the VALUE going.