California Life-Only & Accident and Health AgentAccident and Health InsuranceEasy
A health insurance policy includes a provision that states if the insured becomes disabled and is unable to work, the insurer will waive the payment of premiums for the duration of the disability. This special provision is known as a:
- AWaiver of Premium Rider
- BIncontestability Clause
- CGuaranteed Renewability Clause
- DConversion Privilege
Show answer & explanationAnswer & explanation
Correct answer: A. Waiver of Premium Rider
The Waiver of Premium Rider is a common provision in health and life insurance policies that allows the insured to stop paying premiums if they become totally disabled, while the policy remains in force. This protects the insured from losing coverage during a period of inability to earn income.
Why the other options are wrong
- B. The Incontestability Clause prevents the insurer from denying claims after a certain period, not waiving premiums.
- C. Guaranteed Renewability ensures the policy can be renewed without cancellation, but doesn't waive premiums.
- D. A conversion privilege allows changing from a group policy to an individual policy, not premium waiver.
Waiver of Premium Rider
A rider in an insurance policy that exempts the policyholder from paying premiums if they become totally disabled, while keeping the policy in force.
- Applies in cases of total disability
- Keeps the policy active without premium payments
- Often has a waiting period before benefits begin
Memory trick: Riders add special powers to your insurance shield, like a premium-waiving spell.