California Life-Only & Accident and Health AgentLife InsuranceHard
An applicant for a life insurance policy has a history of recreational skydiving. The underwriter determines that while the risk is elevated, it is still insurable. To cover the additional risk without declining the policy or charging a significantly higher premium across the board, the insurer might include a specific provision. Which of the following is MOST likely to be added to the policy?
- AWaiver of Premium rider
- BGuaranteed Insurability rider
- CExclusion rider
- DAccidental Death Benefit rider
Show answer & explanationAnswer & explanation
Correct answer: C. Exclusion rider
An exclusion rider is used to specifically exclude coverage for certain high-risk activities, such as skydiving, or specific causes of death. This allows the insurer to issue a policy to an otherwise insurable applicant without covering the particular elevated risk, thus avoiding a complete declination or an excessively high standard premium.
Why the other options are wrong
- A. A Waiver of Premium rider waives premiums if the insured becomes disabled, unrelated to skydiving risk.
- B. A Guaranteed Insurability rider allows the insured to purchase additional coverage later without new underwriting, which is unrelated to mitigating current high-risk activities.
- D. An Accidental Death Benefit rider increases the payout for accidental death, which would be counterproductive for a high-risk activity like skydiving.
Exclusion Rider
An attachment to a life insurance policy that excludes coverage for specific risks, causes of death, or activities.
- Used for high-risk hobbies, occupations, or pre-existing conditions.
- Allows policy issuance when standard coverage is too risky.
- Reduces the insurer's liability for specific events.
Memory trick: When risk is high, a rider might apply.