Florida 2-15 Life, Health and Variable Annuity AgentGeneral Knowledge of Health InsuranceEasy
A client has a permanent life insurance policy with a 'Waiver of Premium' rider. If the client becomes totally disabled, what benefit does this rider provide?
- AThe death benefit increases annually while the client is disabled.
- BThe policy pays a monthly income benefit for the duration of the disability.
- CThe insurance company waives premium payments for the duration of the disability.
- DThe policy's cash value continues to grow at an accelerated rate.
Show answer & explanationAnswer & explanation
Correct answer: C. The insurance company waives premium payments for the duration of the disability.
A Waiver of Premium rider ensures that if the insured becomes totally disabled, the insurance company will pay the premiums on their behalf, keeping the policy in force without the insured having to make payments.
Why the other options are wrong
- A. The death benefit does not increase due to a Waiver of Premium rider; it remains as scheduled.
- B. This describes a Disability Income rider, not a Waiver of Premium rider.
- D. The Waiver of Premium rider does not accelerate cash value growth; it simply maintains the policy.
Waiver of Premium Rider
An insurance policy rider that, in the event of the insured's total and permanent disability, waives the payment of premiums for the duration of the disability, keeping the policy in force.
- Waives premiums during total disability.
- Keeps policy in force.
- Typically requires a waiting period.
- Does not pay income or increase benefits.
Memory trick: Waiver of Premium: Waive the Worry, Pay no Pennies.